New York - Global stocks rallied on Monday, lifted by merger activity and China's moves to curb inflation without raising interest rates, while oil prices gained after OPEC agreed to maintain output targets.
U.S. Treasury and German bund prices fell as the prospect for stronger growth and higher interest rates in 2011 boosted the appetite for riskier assets at the expense of safe-haven government debt.
Investors were relieved China refrained from boosting interest rates after central bank inflation data over the weekend showed signs that price pressures are broadening beyond food.
China's central bank raised reserve requirements for banks instead of benchmark interest rates, easing concerns that a tightening of its monetary policy could lead to a slowdown in one of the major growth engines of the global economy.
European shares were on track to post their sixth straight session of gains, and MSCI's all-country world stock index rose 0.7 percent.
The pan-European FTSEurofirst 300 index of top shares was up 0.4%, having earlier hit its highest intraday level since late September 2008.
"We have two major economies spearheading growth in 2011, the United States and China, and that is pushing markets ahead and leaving the difficulties with the euro zone to one side for now," said Mike Lenhoff, chief strategist at Brewin Dolphin.
The Dow Jones industrial average gained 15.37 points, or 0.13%, to 11 425.69. The Standard & Poor's 500 Index added 2.80 points, or 0.23%, to 1 243.20. The Nasdaq Composite Index rose 3.20 points, or 0.12%, to 2 640.74.
Merger activity helped lifted U.S. equities.
General Electric Co will buy British oilfield services company Wellstream Holdings Plc for about £800m ($1.3bn), while Dell Inc will acquire Compellent Technologies Inc, a data storage company, for $960m.
"Some have been arguing that the market is tired after such a strong rally and is due for a pullback," said Peter Cardillo, chief market economist at Avalon Partners in New York. "But the relief factor from China, although temporary, and a flurry of M&A this morning is all pointing to a further rally."
Copper, which is used in power and construction, hit a record high, while gold extended gains above $1 390 an ounce and the dollar surrendered early gains against the euro.
The euro extended gains against the dollar, hitting a session high just above $1.33, with traders citing a more tolerant attitude toward risk after China's move to cool inflation.
"It seems the market is comfortable with a euro just above $1.30, and for now, it would take very specific developments to push it out of its recent range - call it $1.3150 to $1.3450," said Matthew Strauss, a strategist at RBC Capital Markets.
Bond prices fell. The benchmark 10-year U.S. Treasury note was down 5/32, with the yield at 3.3404%.
The Organization of the Petroleum Exporting Countries agreed, as expected, on Saturday to maintain its production policy and leading member Saudi Arabia said it still favored oil prices between $70 and $80 per barrel.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index off 0.5% at 79.647.
The euro was up 0.60% at $1.3313, while against the Japanese yen, the dollar was down 0.23% at 83.72.
U.S. light sweet crude oil rose $1.60 to $89.38 a barrel.
Asian stocks posted modest gains, helped by a nearly 3% rise in Chinese shares on Beijing's latest policy moves. MSCI's Asia index, excluding Japan, rose 0.5%, and Japan's Nikkei average closed 0.8% higher.