Wall Street advanced Monday as expectations for an interest rate cut from the U.S. Federal Reserve and an uptick in pending home sales helped offset concerns about another round of subprime mortgage-related losses, according to AP. Investors remained upbeat ahead of the Fed's rate-setting meeting on Tuesday. Policymakers are broadly expected to lower rates, though economists are still split over whether there will be a quarter-point cut or a half-point cut. The National Association of Realtors gave Wall Street reason to be optimistic about the economy Monday when it said its forward-looking index of U.S. home sales rose in October for the second month in a row. Though investors are still expecting the housing market to remain weak well into 2008, the association is forecasting sales and prices to start recovering modestly next year. The downturn in housing has led to huge losses among banks that invested in securities backed by mortgages, and on Monday, UBS was the latest to reveal large writedowns. The Swiss bank said it will write down some $10 billion (¤6.8 billion) of subprime mortgage holdings, which could lead to full-year losses. However, its U.S. shares rose $1.09, or 2.2 percent, to $51.57 as the bank unveiled plans for an $11.5 billion (¤7.8 billion) cash infusion from the government of Singapore and an unidentified Middle Eastern investor. «The financial stocks are leading the way higher because of the UBS news,» said Donald Selkin, director of equity research at Joseph Stevens. «There is optimism today that we have seen the worst in the financial sector. There is a feeling that these stocks have already discounted the worst case scenario.» The announcement from UBS comes ahead of fourth-quarter earnings from the top U.S. investment banks. Lehman Brothers Holdings Inc. will release results Thursday, while Goldman Sachs Group Inc., Morgan Stanley and Bear Stearns Cos. are scheduled to report next week. The Dow Jones industrial average rose 96.82, or 0.71 percent, to 13,722.40. Broader stock indicators also rose. The Standard & Poor's 500 index rose 9.77, or 0.65 percent, to 1,514.43. The Nasdaq composite index added 15.02, or 0.56 percent, to 2,721.18. Bond prices fell. The 10-year Treasury note's yield, which moves opposite the price, rose to 4.16 percent from 4.12 percent late Friday. The dollar was mixed against other major currencies, and gold prices rose. Wall Street has posted robust gains recently as investors grew more confident in the Fed's openness to loosening its policy again. The Dow has risen more than 640 points over the last two weeks, a rally that has brought the blue-chip index to less than 4 percent below the record close it reached Oct. 9. Last week, the Dow ended 1.90 percent higher, the S&P 500 index finished up 1.59 percent, and the Nasdaq ended up 1.70 percent. In corporate news Monday, Blackstone Group LP might be planning a bid to acquire steel company Rio Tinto Ltd., according to Britain's Daily Telegraph. Blackstone would lead a consortium that would include China's sovereign wealth fund, according to the report. Blackstone rose 87 cents, or 3.9 percent, to $22.80, and Rio Tinto rose $6.40, or 1.4 percent, to $474.68. Japanese drug maker Eisai Co. said Monday it will buy U.S. biopharmaceutical company MGI Pharma Inc. for $3.9 billion (¤2.6 billion) in a move aimed at boosting its cancer drug business and sustaining sales growth. MGI Pharma rose $6.65, or 19.9 percent, to $40.11. McDonald's Corp., the world's largest fast-food company, said global same-store sales rose 8.2 percent in November. Much of the strength came from overseas, including Europe and Asia. McDonald's, one of the 30 Dow components, rose $1.18 cents, or 2 percent, to $61.35. Oil prices were volatile amid end-of-year position taking and anticipation of Tuesday's Fed meeting. Light, sweet crude reversed course to trade down 57 cents to $87.71 a barrel on the New York Mercantile Exchange. Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 427.8 million shares. Overseas, Japan's Nikkei stock average closed down 0.20 percent, while Hong Kong's Hang Seng index fell 1.18 percent. Britain's FTSE 100 rose 0.16 percent, Germany's DAX index rose 0.49 percent, and France's CAC-40 increased 0.56 percent.
