NEW YORK - US stock markets were higher Monday morning as investors tied up their year-end positions and as Merrill Lynch announced it had won sizeable cash infusions of up to 6.2 billion dollars.
Merrill, which has seen its finances stricken by multibillion dollar mortgage market losses, said Temasek Holdings Pte. Ltd., a Singapore state-owned investment group, was buying a 4.4-billion-dollar shareholding in the investment bank and brokerage.
A US investment firm has also agreed to snap up a 1.2 billion dollar stake in Merrill while Temasek may increase its shareholding by a further 600 million dollars.
Merrill executives said the cash injections would help it shore up its stressed balance sheet.
The Dow Jones Industrial Average was up a strong 82.83 points (0.62 percent) at 13,533.48 at 1616 GMT.
The tech-rich Nasdaq composite had gained 15.30 points (0.57 percent) to 2,707.29 while the Standard & Poor's 500 index spiked 8.89 points (0.60 percent) to 1,493.35.
Investors focused on Merrill's announcement as trading wound down for the Christmas Day holiday.
"John Thain, the former CEO of NYSE Euronext, stepped in to right the ship and he has wasted little time in strengthening the firm's balance sheet," Patrick O'Hare, a market analyst at Briefing.com, said of Merrill's announcement.
Thain was appointed Merrill's new chief executive officer after former CEO Stan O'Neal was ousted in October as the investment firm announced nearly eight billion dollars in writeoffs, mainly related to soured mortgage investments.
"One of my first priorities at Merrill Lynch was to strengthen the firm's balance sheet, and today we have made great progress towards that by bolstering our capital position through these investments," Thain said of the new cash infusions.
Temasek has the option to purchase an additional 600 million dollars of Merrill stock by March 28 under the deal's terms. The bank and brokerage said the Singapore fund's ownership stake would remain under 10 percent.
Just before the deal was announced Monday morning, Merrill also announced that GE was buying its mid-market commercial finance business. The companies did not reveal the deal's financial terms.
Merrill's stock was up 0.4 percent at 55.75 dollars while GE's shares were 1.6 percent higher at 37.57 dollars.
Traders said they were otherwise finalizing their stock portfolios ahead of the year-end, but not expecting too much dramatic action on the New York Stock Exchange.
Bond prices fell as the yield on the 10-year US Treasury bond jumped to 4.187 percent from 4.168 percent Friday and that on the 30-year bond increased to 4.594 percent from 4.575 percent. Bond yields and prices move in opposite directions.
Stock trading will cease early on Wall Street at 1:00 pm (1800 GMT) and the stock markets will be shut Tuesday for the Christmas Day public holiday.
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12/24/2007 16:29 GMT