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Solid Citigroup earnings, M&A power US stocks higher

US stocks scored solid gains, lifted by Citigroup's better-than-expected earnings and a rash of merger and acquisition activity.

NEW YORK: US stocks scored solid gains on Monday, lifted by Citigroup's better-than-expected earnings and a rash of merger and acquisition activity.

At the closing bell, the Dow Jones Industrial Average gained 111.61 points (0.66 per cent) at 17,055.42.

The broad-based S&P 500 advanced 9.53 (0.48 per cent) to 1,977.10, while the tech-rich Nasdaq Composite Index rose 24.93 (0.56 per cent) to 4,440.42.

"After suffering through last week's dismal performance, the bulls got the trading week off on positive footing, courtesy of Citigroup's better-than-expected 2Q results, as well as a plethora of global M&A news," Charles Schwab & Co. said in a research note.

Banking giant Citigroup announced second-quarter earnings per share of US$1.24, excluding a financial charge for its US$7 billion settlement to settle mortgage probe claims, that was well above the US$1.05 projected by analysts. Citi shares soared 3.0 per cent.

Bank of America Merrill Lynch said Citi's operating performance was "encouraging for large peers that report earnings this week."

Investors apparently agreed, pushing those banks up: JPMorgan Chase (+0.9 per cent), Goldman Sachs (+1.3 per cent), Bank of America (+1.2 per cent) and Morgan Stanley (+1.3 per cent).

Dow component Boeing added 1.1 per cent after announcing, at the Farnborough airshow near London, that Okay Airways, the first privately owned Chinese carrier, had agreed to buy 10 single-aisle Boeing 737 planes worth US$980 million at current list prices.

US drug maker AbbVie slipped 0.2 per cent after Dublin-based Shire Pharmaceuticals backed its upwardly revised US$53.6 billion takeover deal and said it was close to recommending it to its shareholders. US-traded Shire shares rose 2.1 per cent

AbbVie, spun off from Abbott Laboratories in 2013, had been repeatedly rejected by Shire since an initial proposal in early May.

Abbott Laboratories, meanwhile, said it was selling its branded generics drugs for developed markets to generic drugmaker Mylan for stock valued at an estimated US$5.3 billion. Abbott rose 1.3 per cent and Mylan gained 2.1 per cent.

Online shopping site eBay and auction house Sotheby's said they were teaming up to provide an online platform for sales of art and collectibles. Shares in eBay fell 0.7 per cent and Sotheby's rose 1.0 per cent.

Whiting Petroleum plans to acquire Kodiak Oil & Gas in a US$6 billion all-stock deal that establishes the biggest producer in the valuable Bakken/Three Forks shale region, the US companies announced. Whiting leaped 7.7 per cent and Kodiak advanced 4.8 per cent.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.54 per cent from 2.52 per cent Friday, while the 30-year edged up to 3.37 per cent from 3.34 per cent. Bond prices and yields move inversely.

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