Reuters - Wall Street up on higher price for Bear, home sales

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Wall Street up on higher price for Bear, home sales

Monday, Mar 24, 2008 2:33PM UTC

By Justin Grant

NEW YORK (Reuters) - Stocks rose on Monday on a surge in financial shares following news that JPMorgan Chase & Co had boosted its offer to buy Bear Stearns Cos five-fold to $10 a share.

Investors warmed to the higher offer as it may avert a long shareholder battle and let JPMorgan close the deal sooner.

Sentiment received an added boost when the National Association of Realtors said the pace of existing home sales in the United States rose in February to a better-than-expected 5.03 million-unit annual rate.

The Standard & Poor's index of financial shares climbed 2.5 percent. Shares of JPMorgan rose more than 2 percent to $47.00, while Bear's shares more than doubled to $12.53, well above the new offer price.

JPMorgan's original agreement on March 16 to pay $2 per share was considered a fire-sale price for the 85-year-old Wall Street investment bank which collapsed in a liquidity crisis after suffering large losses on soured subprime mortgage debt.

"The financials have been knocked down so much, there is going to be some good fundamental buying out there for some of these companies," said Stephen Carl, principal head of U.S. equity trading at The Williams Capital Group LP in New York.

"We'll see some kind of a turnaround."

The Dow Jones industrial average climbed 155.73 points, or 1.26 percent, to 12,517.05. The Standard & Poor's 500 Index was up 18.75 points, or 1.41 percent, at 1,348.26. The Nasdaq Composite Index was up 35.33 points, or 1.56 percent, at 2,293.44.

In another move aimed at easing the housing crisis, regional U.S. banks will be allowed to boost holdings of mortgage-backed securities by more than $100 billion, regulators said on Monday.

Financial weekly Barron's said financial shares are poised to rise between 10 and 20 percent in the next year as panic over the global credit crisis recedes and earnings improve, according to its March 24 edition.

Prices of U.S. Treasury debt extended Friday's losses as demand for safe-haven government paper fell.

In earnings news, shares of upscale jeweler Tiffany & Co surged 12.4 percent to $43.39 after it posted an unexpectedly high quarterly profit and forecast robust growth in markets outside the United States and Japan.

(Editing by James Dalgleish)