US markets end up as Japan fears ease

BUYERS emerged in US stocks yesterday, enticed by the biggest proposed merger of the year, though crises in Japan, the Middle East and North Africa meant market volatility would continue.

The bulls have held the upper hand for three days, as the S&P 500 has put together its best three-day run since early December.

The Dow Jones industrial average gained 178.01 points, or 1.5 per cent, to 12,036.53. The Standard & Poor’s 500 Index climbed 19.18 points, or 1.5 per cent, to 1,298.38. The Nasdaq Composite Index added 48.42 points, or 1.83 per cent, to 2,692.09.

Dow component AT&T rose 1.1 per cent after the company announced plans to buy Deutsche Telekom's T-Mobile USA and refocused investor attention on attractive company valuations.

“The AT&T deal is just a piece of it. The other piece of it is there is a sense of some better news out of Japan and things haven’t gotten any worse in Africa,” said Gail Dudack, chief investment strategist at Dudack Research Group.

The $39bn (£23.9bn) AT&T deal would create the largest wireless phone operator in the United States.

Shares of Verizon gained 1.7 percent to $36.46, while Sprint Nextel shares plummeted 13.5 per cent to $4.37. Leap Wireless International shot up 15.7 per cent to $14.05 and MetroPCS Communications gained 4.8 per cent to $15.64.

While the outlook for Japan remains a worry, glimmers of hope about the nuclear crisis and investor Warren Buffett’s comments about Japanese stocks also helped investor sentiment on Monday.

The iShares MSCI Japan Index Fund was up 2.7 per cent.

The market volatility index fell 16.2 per cent, its biggest daily percentage drop since May, and was trading below its 14- and 200-day moving averages for the first time since the earthquake in Japan.

Dudack said of Japan and the turmoil in the oil-producing region that “neither situation is resolved, so it's hard to know what the effects are. The market has been really volatile and it will continue to be really volatile”.