Stocks extend gains
as oil prices decline

NEW YORK » Stocks extended their advance into a third session yesterday on news of dropping oil prices and a bevy of corporate mergers.

Oil prices fell for the third straight day, sliding more than $1 a barrel after Hurricane Dennis missed key Gulf of Mexico refineries, averting a disruption in fuel supplies. Wall Street has been nervously watching oil prices, worried that further increases would curb consumer spending and chip away at corporate profits.

Light sweet crude for August delivery fell 71 cents to $58.92 a barrel on New York Mercantile Exchange.

News of corporate deals in telecom, banking and pharmaceuticals boosted stocks, too, stoking investors' hopes that second-quarter earnings might be stronger than expected. Investors welcomed the deals as a sign that companies feel secure enough to spend some of the cash they accumulated during the earnings run-up of the past two years.

The Dow Jones industrial average rose 70.58, or 0.7 percent, to 10,519.72. The S&P 500 index rose 7.58, or 0.6 percent, to 1,219.44, moving into positive territory for the year. The Nasdaq composite index rose 22.55, or 1.1 percent, to 2,135.43. Advancers led decliners by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 1.84 billion shares, down from 1.91 billion shares Friday. The NYSE composite index jumped 51.92, or 0.71 percent, to 7,382.50. The American Stock Exchange composite index rose 11.35, or 0.73 percent, to 1,572.36.

`The Russell 2000 index of smaller companies hit an all-time high as it rose 9.60, or 1.4 percent, to 671.74. Investors are flocking to specialized small-cap companies, which are seen as an alternative to larger companies that are more vulnerable to swings in oil prices.

Bonds rose slightly, with the yield on the 10-year Treasury note at 4.10 percent, compared to 4.11 percent late Friday.

Yesterday's deals included a report that Goldman Sachs Group Inc. and German financial firm Allianz are in talks to buy a $1 billion-plus stake in one of China's largest state-owned commercial banks. Drug distributor McKesson Corp. said it would buy a smaller regional distributor and Dutch media company VNU NV said it would buy U.S.-based health care data provider IMS Health Inc. in a cash and stock deal valued at more than $6 billion.

The talks involving Goldman Sachs, Allianz and the Commercial Bank of China are at an early stage, according to a report on The Asian Wall Street Journal's Web site, which cited unidentified sources. Goldman Sachs rose $1.66 to $107.31. Allianz rose 21 cents to $11.99