M&A dominates Wall St, gold holds hear high

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Mergers and acquisitions dominated activity on Wall Street overnight, with almost US$10 billion of deals announced as the Standard & Poor's 500 Index held near a four-month high.

A flurry of deals signals investors see value in equity assets.

Alberto Culver, the maker of consumer products including Alberto V05 shampoo, soared 20 per cent after Unilever offered to buy the company for US$3.7 billion.

AirTran Holdings, a Nevada-based regional airline, surged 62 per cent after Southwest Airlines made a $1.4 billion offer to gain access to Atlanta, the busiest US airport. Southwest rose 14 per cent.

Wal-Mart Stores, the world's biggest retailer, slipped 0.6 per cent on the NYSE after offering to buy South African retailer Massmart for more than $4 billion.

M&T Bank fell 5.4 per cent after Bloomberg reported it ended talks with Santander's US banking unit.

The S&P 500 slipped 0.02 per cent to 1148.45, having reached the highest level since early May the previous day. The Dow Jones Industrial Average edged up 0.04 per cent to 10863.17.

Still the S&P 500 is heading for a monthly rally of more than 9 per cent, one of only a handful of months in the past two decades to achieve a gain of that magnitude.

M&A activity is being driven by "expectation of long-term sizable benefit," Jim Paulsen, chief investment officer at Wells Capital Management, told Reuters.

Equity markets in Europe weakened, with the UK's FTSE 100 down 0.5 per cent to 5573.42, Germany's DAX 30 falling 0.3 per cent to 6278.89 and France's CAC 40 shedding 0.4 per cent to 3766.16.

Gold held near the record high US$1,301.60 an ounce reached last week, with selling pressure emerging as some traders sought to lock in gains of almost 4 per cent this month. Gold has rallied as the US dollar weakened, luring some investors to buy the precious metal as an alternative investment.

Gold futures for December delivery recently traded at US$1,296.15 an ounce on the New York Mercantile Exchange.

The euro fell from a five-month high against the greenback after a German media report that European Central Bank mulled the reactivation of the region's financial rescue funds to assist Ireland in refinancing its debt.

The euro traded at slid 0.1 per cent to $1.3479 in New York, from $1.3492 on Friday and earlier reached a five-month high of $1.3507.

The dollar traded at 84.22 yen from 84.25 yen.

The US Treasury Department may be poised to announce that American International Group is ready to return to independence, Bloomberg reported, citing people familiar with talks.

The Treasury would begin converting its $49 billion preferred stake into ordinary shares by the first half of 2011, according to the report.