Stocks Are Higher on More Takeover News

NEW YORK - Stocks advanced in early trading Wednesday after Alcan Inc. rebuffed a hostile bid by aluminum competitor Alcoa Inc., and Canadian media reported that Australian mining giant BHP Billiton Ltd. might make its own offer.

Investor have been encouraged by a host of takeover offers this week, a sign that liquidity is ample and corporate executives are confident about the economy. About $2.3 trillion worth of deals have been announced so far this year, according to financial data provider Dealogic, and the tally is on track to beat last year's record $4 trillion.

Alcan late Tuesday rejected Alcoa's $27.6 billion bid, saying it did not reflect its growth prospects. The Canadian company is said to be in talks with BHP as a way to fend off Alcoa, according to a report in Canada's Globe and Mail newspaper, which cited unnamed sources.

The bidding battle rumors came amid a wave of takeover activity Wednesday: EMI Group Chief Executive Jim Fifield might be in the final stages of planning an offer to buy the music company, the New York Post reported. Rival Warner Music Group Corp. in the past has also expressed interest in buying EMI.

And late Tuesday, Payless ShoeSource Inc. said it will buy competing shoe store chain Stride Rite for about $800 million, while real estate investment trust Crescent Real Estate Equities Co. said it will be bought by another real estate investment firm, Morgan Stanley Real Estate, for about $2.34 billion.

In morning, the Dow Jones industrial average rose 38.93, or 0.29 percent, to 13,578.88.

Broader stock indicators were also higher. The Standard & Poor's 500 index advanced 3.13, or 0.21 percent, to 1,527.25, and the Nasdaq composite index gained 0.36, or 0.01 percent, to 2,588.38.

Bonds were little changed, with the yield on the benchmark 10-year Treasury note at 4.83 percent, the same as late Tuesday.

In the wake of the Alcan's rejection, Alcoa rose $1.18, or 3 percent, to $40.14; Alcan rose $2.77, or 3.4 percent, to $83.80; and BHP Billiton rose 95 cents to $51.70.

Meanwhile, the Bancroft family, which controls Dow Jones & Co., are planning a private meeting on Wednesday to discuss a $5 billion bid by Rupert Murdoch's News Corp., according to a report in The Wall Street Journal, which is owned by Dow Jones.

Dow Jones rose $2, or 3.9 percent, to $53.46.

In addition to the flurry of deal-making, investors were cheered by retailers' earnings; Target Corp., the second-largest U.S. discount chain, reported before the bell that first-quarter profit beat projections due strong sales of spring merchandise. Target rose $2.03, or 3.5 percent, to $60.07.

In other corporate news, electronic heart devices maker Medtronic Inc. reported late Tuesday that fourth-quarter profit rose 10 percent to beat Wall Street projections. Medtronic rose $2.63, or 5.2 percent, to $53.46.

And Forest Laboratories Inc. and Cypress Biosciences Inc. both reported late Tuesday that a late-stage study on the depression drug Milnacipran showed positive results. Forest Laboratories jumped $4.28, or 8.2 percent, to $56.15, while Cypress Biosciences skyrocketed $8.97, or 107 percent, to $17.50.

Crude oil prices rose 8 cents to $65.59 a barrel on the New York Mercantile Exchange ahead of the government's weekly report on gasoline and crude oil inventories. Gasoline prices have been soaring on worries that U.S. refiners aren't producing enough fuel to meet demand ahead of the Memorial Day holiday weekend.

There is little economic data expected to be released Wednesday, but investors might begin to take positions ahead of the Commerce Department's reports on durable goods and new home sales, due out Thursday.

The Russell 2000 index of smaller companies was up 0.08, or 0.01 percent, at 840.00.

Wednesday's stock advance came as Chinese stocks rose to a record for the third straight session Wednesday on optimism over reports the government may triple quotas for foreign investment in local bourses. The benchmark Shanghai Composite Index gained 1.5 percent to 4,173.71. The Shenzhen Composite Index rose 2.1 percent to 1,223.98, also a record close.

Japan's Nikkei stock average rose 0.14 percent. In afternoon trading, Britain's FTSE 100 was up 0.49 percent, Germany's DAX index added 0.86 percent, and France's CAC-40 rose 0.30 percent.