WALL STREET RALLY

U.S. stocks climbed for a fifth day on speculation that losses in credit markets won't derail this year's record pace of takeovers or diminish demand for metals and other raw materials.

MGM Mirage, the world's second-largest casino company, posted its biggest gain in three months after Dubai agreed to buy a stake. Nymex Holdings Inc. climbed after its chairman said the world's largest energy exchange may be bought. Nucor Corp. led materials producers to the top rally in the Standard & Poor's 500 Index after BHP Billiton Ltd., the world's biggest miner, said global demand for commodities remains strong.

The S&P 500 rose 7.11, or 0.5 percent, to 1,454.23 at 2:28 p.m. in New York. The Dow average added 79.99, or 0.6 percent, to 13,170.85. The Nasdaq Composite Index increased 18.33, or 0.7 percent, to 2,539.63.

Stocks in Europe gained for a fourth day, with the Dow Jones Stoxx 600 Index advancing 1.7 percent. The Morgan Stanley Capital International Asia-Pacific Index climbed 0.3 percent.

``You're going to see a pickup in merger activity,'' said Kevin Cronin, who oversees $190 billion as head of investments at Putnam Investments in Boston. ``Some of these companies look very attractive.''

An unprecedented amount of mergers and acquisitions propelled the stock market to a record July 19. The $1.6 trillion in announced U.S. deals so far in 2007 is on pace to eclipse last year's record by 48 percent.

MGM, Nymex Gain

MGM Mirage added $7.43, or 10 percent, to $81.75. Dubai World, owned by the Dubai government, agreed to invest as much as $5.1 billion for a 9.5 percent stake in the company and half of its CityCenter project, a complex of hotels and condominiums under construction in Las Vegas. State-owned Dubai World will pay $84 a share, 13 percent more than MGM's closing price yesterday.

Nymex Holdings jumped $8.82 to $127.60. The energy exchange said it has held takeover talks to expand in Europe and add to its metals and oil contracts. Chairman Richard Schaeffer said discussions are at an early stage and any transaction would have to be at a ``meaningful premium'' to the current share price.

TD Ameritrade Holding Corp. advanced after the Wall Street Journal said the online brokerage is in merger talks with E*Trade Financial Corp. ``We don't comment on market speculation or rumors,'' said Pam Erickson, a spokeswoman for E*Trade. Katrina Becker, a spokeswoman at TD Ameritrade, couldn't be reached.

`Reenergizes'

TD Ameritrade climbed 31 cents to $16.66, while E*Trade lost 26 cents to $15.31.

``As you're looking at a couple of deals being talked about, that reenergizes the marketplace and shows a credible possibility for things to pick up a bit,'' said Art Hogan, the Boston-based chief market analyst at Jefferies & Co.

The Fed yesterday made it cheaper for dealers to borrow Treasuries from the New York Fed, and last week cut its discount rate to help ease a credit crunch. Fed Chairman Ben S. Bernanke agreed to use ``all of the tools at his disposal'' to restore stability to markets roiled by mortgage defaults this month, Christopher Dodd, the Senate Banking chairman, said yesterday after meeting with Bernanke.

`Needs to be Cut'

``The fed funds rate does need to be cut,'' said Jack Ablin, who helps manage $52 billion as chief investment officer at Harris Private Bank in Chicago. ``There is some deterioration in the economy, and the inflation pressure has eased. The market situation aside, the fed funds rate needs to be lower.''

The four largest U.S. banks each borrowed $500 million from the Fed's discount window on behalf of clients.

The transactions were ``intended to display the effectiveness'' of the discount window, JPMorgan Chase & Co., Bank of America Corp. and Wachovia Corp. said in a joint statement. Citigroup Inc. said in a separate statement it ``stands ready to continue to access the discount window as client needs and market conditions warrant.''

JPMorgan fell 80 cents to $45.40, Bank of America dropped 7 cents to $51.23, Citigroup decreased 28 cents to $47.78.

Wachovia added 20 cents to $49.44 after raising its quarterly dividend by 14 percent, the most since 2004, in an effort to make the stock more attractive to investors.

Earlier, financial shares gained in Europe, led by Societe Generale SA and Man Group Plc. BHP Billiton rallied after the world's biggest mining company posted record full-year profit. In Asia, memory-chip maker Elpida Memory Inc. and steelmaker Posco paced gains.

Raw-Material Producers Rally

Material stocks in the S&P 500 gained 2.7 percent, the most among 10 industries. BHP said a global credit crunch is unlikely to derail the five-year rally in commodity prices being driven by emerging economies such as China and India.

Nucor, the second-largest U.S.-based steel company, rose $3.24 to $53.24. Alcoa, the No. 2 aluminum producer, climbed $1.55 to $36.15.

Emcor Group Inc. gained $2.08, or 7 percent, to $32.07. The builder of pharmaceutical laboratories agreed to buy Ohmstede Ltd. to offer maintenance services to refineries. Emcor plans to buy Ohmstede from private-equity firm First Reserve Corp. for $455 million in cash. Ohmstede will add 10 cents a share to Emcor earnings next year and $280 million in revenue, Emcor said.

Apple Inc. increased $3.68 to $131.25 after the Financial Times said the maker of the iPhone signed exclusive distribution agreements with three mobile-phone operators in Europe. T-Mobile of Germany, Orange in France and O2 in the U.K. each will give Apple 10 percent of sales from phone calls and data transfers made over the devices, the Financial Times reported, without giving the source of the information.

Jennifer Bowcock, a spokeswoman for Apple, declined to comment on ``rumors and speculation.'' T-Mobile spokeswoman Marion Kessing, France Telecom's Berengere Arnold and O2's David Nicholas also declined to comment.

Toll Brothers, Medtronic

Toll Brothers Inc. gained $1.08 to $22.17. The largest U.S. luxury home builder said fiscal third-quarter profit fell 85 percent to $26.5 million, or 16 cents a share, from $174.6 million. The result was higher than the average analyst estimate of 2 cents a share in a Bloomberg survey.

Medtronic Inc. lost 23 cents to $52.63 after the biggest maker of electronic heart devices reported fiscal first-quarter revenue that missed analysts' estimates. Revenue climbed 7.9 percent to $3.13 billion, missing the $3.16 billion average estimate of analysts surveyed by Bloomberg, helped by sales outside the U.S.

Today's rally extended across industry groups and company sizes. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose for the fifth straight day by gaining 0.8 percent; 21 of 24 industries in the S&P 500 climbed; and 25 of 30 stocks in the Dow advanced. The Russell 2000 Index, a benchmark for companies with a median market value of $648 million, added 1 percent to 796.27.