U.S. MARKET AVERAGES

U.S. stocks traded in the positive territory during the morning session, supported by merger-and-acquisition activity, including a report that ConocoPhillips is in talks to buy oil and gas producer Burlington Resources Inc. for more than $30 billion and a rating upgrade on Google Inc. Stocks have recently moved slightly down with the three major averages posting modest gains.

With no significant economic news due out today and despite activity in takeover deals, investors remained cautious ahead of retail sales figures due out tomorrow and the Tuesday meeting of the U.S. Fed Reserve’s policy-setting committee. Another quarter-percentage-point rate increase is expected, but investors are mostly interested in the outlook for rates and whether the long streak of rate hikes will end soon.

HMO sector dropped about 1.5% on intensified sell-off. The transportation sector continued to slide as well, though the Dow Jones Transportation Average lost less than 1%.

Commodity stocks were the biggest gainers of the day. The retail group was anorher notable mover to the upside, though posting only modest advance. The disk drive sector continued to show moderate gains.

In late morning trading, the Dow Jones industrial average gained 15.60, or 0.1%.The Standard & Poor''s 500 index was up 2.63, or 0.21% and the Nasdaq composite index advanced 7.32, or 0.32%.

Bond prices were little changed, with the yield on the 10-year Treasury note flat at 4.53% from late Friday.

Movie studio Paramount Pictures, a unit of media conglomerate Viacom Inc., agreed to buy DreamWorks SKG Inc. in a $1.6 billion deal involving $775 million in cash and $825 million of assumed debt. General Electric Co.''s NBC Universal had been in talks with DreamWorks for most of this year. Viacom was up 47 cents at $34.89, and GE rose 14 cents to $35.67.

Google Inc. advanced after Credit Suisse First Boston raised the company''s price target by $75 to $475, helped by forecasts for accelerating revenue in the online advertising market.

Tommy Hilfiger Corp., apparel designer, which put itself up for sale in August, is expected to receive three takeover offers by Friday.

MOVERS AND SHAKERS

ConocoPhillips (COP: chart) is in talks to acquire oil and gas producer Burlington (BR: chart) for more than $30 billion. The total annual revenue of thee companies would be more than $211 billion. ConocoPhillips fell 3.4%.

8x8 Inc. (EGHT: chart) signed a private label agreement with BellSouth Corp (BLS: chart)for 8x8 to provide technology, integration and operational services for BellSouth''s digital phone service. Shares of 8x8 Inc soared to 58.4%.

Myogen (MYOG: chart) reported positive top-line results for its Ambrisentan Phase 3 trial for pulmonary arterial hypertension, meeting the primary efficacy endpoint of improved exercise capacity, the key secondary endpoint of time to clinical worsening and several other secondary efficacy endpoints. The stock surged 39%.

Lannett Co (LC: chart) received approval of its abbreviated new drug application for a generic version of Adoxa, Bradley Pharmaceuticals'' anti-biotic treatment for bacterial infections, from the Food and Drug Administration. Shares of Lannett rose 11.3%.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished Monday session in the positive. The Nikkei soared to a new five-year-high, rising to 15,738.70 on increased confidence in financial stocks with Tokyo Stock Exchange admitting that the turbulent trading last week was due to a technical error in the trading system. Across the region, South Korea’s Kospi rose 1.2%, Hong Kong’s Hang Seng advanced 0.5%, and Australia’s All Ordinaries rose 0.6%.

European stocks closed higher, supported by French media companies, including Vivendi Universal and gains in U.S. and Japanese markets. The German DAX 30 rose 0.4%, the French CAC 40 gained 0.2%, and London’s FTSE 100 rose 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices rose above $60 a barrel on oil depot explosion in London over the weekend and OPEC’s decision to maintain production at the highest levels. Light sweet crude for January delivery gained 86 cents to $60.25 a barrel on the Nymex. Heating oil added 1 cent to $1.7425 a gallon, while gasoline rose nearly 2 cents to $1.62. Natural gas climbed 33 cents $14.64 per 1,000 cubic feet. London Brent surged $1.09 to $58.40.