Dow advances on sale of Dubai Ports to AIG

NEW YORK » Wall Street extended its advance yesterday as investors digested new takeover developments and placed bets ahead of the Federal Reserve's decision on interest rates.

A series of recent acquisition announcements has reassured investors that corpo- rations still feel the economy is robust enough to strike deals. About $45.4 billion worth of acquisitions were announced by Standard & Poor's 500 companies last week, setting up this year to be the best for M&A since 2000.

Driving the Dow Jones industrials was American International Group Inc., which agreed to buy the U.S. port operations of state-owned Dubai Ports World.

Hedge fund SAC Capital Advisors LLC bought a stake in miner Phelps Dodge Corp., and said it would oppose the company's planned takeover by Freeport-McMoRan Copper & Gold Inc.

Speculation about possible deals also helped the market. Medical device maker Biomet Inc. and travel reservation company Sabre Holdings Corp. rose on reports they might be acquisition targets.

"M&A is generally viewed upon as being a positive to the market," said Steven Goldman, chief market strategist at Weeden & Co. "But, the markets will likely stay relatively shallow, ebbing and flowing about whether we'll cut rates in the first quarter."

Light volume yesterday indicated investors were a bit more cautious as they adjusted their positions before the Fed's meeting today. The central bank raised rates 17 straight times starting in June 2004, then left them unchanged at its last three meetings.

The Dow rose 20.99, or 0.17 percent, to 12,328.48.

Broader stock indicators also advanced. The S&P 500 index rose 3.20, or 0.23 percent, to 1,413.04, and the Nasdaq composite index was up 5.50, or 0.23 percent, at 2,442.86.

The Russell 2000 index of smaller companies was up 0.51, or 0.06 percent, at 793.07.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 2.29 billion shares, compared with 2.44 billion on Friday.

Stocks appear to be heading toward double-digit gains for 2006. The Dow is up 15.03 percent, the Nasdaq 10.77 percent, and the S&P 500 13.20 percent.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.52 percent from 4.55 percent late Friday.

The dollar was mixed against other major currencies, while gold prices moved higher.

The price of light sweet crude fell 81 cents to $61.22 on the New York Mercantile Exchange.