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Merrill Lynch news boosts stocks

Associated Press The Spokesman-Review

NEW YORK – Wall Street advanced sharply Monday, boosted by news that Merrill Lynch & Co. will receive an investment of up to $6.2 billion from two investment groups. The Dow Jones industrial average rose nearly 100 points.

Trading volume was light in Monday’s abbreviated session – a typical occurrence a day ahead of Christmas. Still, with only five trading days remaining in 2007, investors were perhaps looking for any opportunity to tidy up their positions after a year that brought the return of volatility after several years of unusual calm.

Merrill Lynch provided the only significant news of the day. The investment firm said it was receiving a widely expected cash infusion from Singapore’s government-controlled investment fund, Temasek Holdings, and U.S.-based Davis Selected Advisers. The proceeds were expected to cushion Merrill’s mortgage-related writedowns for the fourth quarter.

The nation’s largest brokerage also said it would sell most of its commercial finance unit to GE Capital. Terms of the deal weren’t made public.

Monday’s gains have some investors hoping for a so-called Santa Claus rally – a year-end surge that often extends into the new year and can burnish portfolios. On Friday, the Dow rose more than 200 points and, along with the other major indexes, posted a gain of more than 1.5 percent for the session.

The Dow rose 98.68, or 0.73 percent, to 13,549.33.

Broader market indexes also advanced. The Standard & Poor’s 500 index added 11.99, or 0.81 percent, to 1,496.45; and the Nasdaq composite index rose 21.51, or 0.80 percent, to 2,713.50.

Merrill Lynch fell $1.64, 3 percent, to $53.90 after selling a stake in itself to strengthen its balance sheet. It joins a number of other global banks – including Citigroup Inc., UBS AG, and Morgan Stanley – to secure a capital infusion to diffuse losses from the credit crisis.

Overseas, stock markets in Japan were closed. Britain’s FTSE 100 rose 0.70 percent, Germany’s DAX index rose 1.70 percent, and France’s CAC-40 rose 0.21 percent.