Stocks gain on central bank stimulus signals, mergers

By Daniel Bases

NEW YORK (Reuters) - U.S. stocks opened higher on Monday, extending a global equity rally in Asia and Europe fueled by merger activity and signals that central banks were willing to step further into the economic breach to support growth and inflation.

Share prices found support after a Reuters report that the People's Bank of China was ready to further ease monetary policy to head of slowing inflation. This followed Friday's interest rate cut by the country's central bank.

European Central Bank President Mario Draghi also looked to be clearing the way for full-scale government bond buying that investors hoped for, but was opposed by Germany's Bundesbank.

The euro added to gains versus the dollar after data showed growth in the U.S. services sector fell short of forecasts. This followed an earlier report indicating German business sentiment rebounded in November, breaking a streak of six straight declines.

Merger activity on Monday, with deals in the packaging sector in Switzerland, automotive parts in Korea, insurance in the United States, mobile phones in Nigeria and biopharmaceuticals in the Netherlands was adding to the risk-taking sentiment.

"The carry-over effect from China, taken with the fact that the U.S. is pretty healthy, and you have a market with a bias to trend higher, especially on the cyclical front," said Mike Gibbs, who helps oversee more than $500 billion as co-head of the equity advisory group at Raymond James in Memphis, Tennessee.

The benchmark S&P 500 stock index traded above Friday's record close, gaining 0.29 percent to 2063.50. The Dow Jones industrial average rose 0.19 percent to 17,843.49 in early New York trade.

Shares in Shanghai jumped almost 2 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan added 1.1 percent. Tokyo was closed for a holiday.

European markets were slightly less bullish, with German and French stock indexes rising 0.7 percent to 0.8 percent, while UK stocks were down less than 0.2 percent.

"The markets are continuing to react to the Chinese rate cut on Friday and to Draghi's comments," said Jeremy Batstone-Carr, head of private client research at London-based investment manager Charles Stanley.

In commodity markets, oil was slightly higher ahead of a key OPEC meeting on Thursday amid uncertainty over whether there would be an agreement on a meaningful cut in output to support prices. Brent rose 5 cents at $80.41 a barrel, while U.S. crude added 22 cents to $76.72. Prices have tumbled 30 percent since June to their lowest levels in over four years.

Gold was steady near $1,200 an ounce, as traders cheered the prospect of more global stimulus.

The euro rose 0.40 percent to $1.2435.

U.S. Treasury prices dipped ahead of new debt supply this week and profit-taking ahead of the U.S. Thanksgiving holiday.

(Editing by Jeffrey Benkoe)