Merger Monday on Wall Street

NEW YORK (CNNMoney.com) -- Stocks rallied Monday morning as investors welcomed a rash of corporate deals and rumors, ahead of the start of the two day Federal Reserve policy meeting.

The Dow Jones industrial average (up 80.27 to 12,190.68, Charts), the broader S&P 500 (up 9.67 to 1,396.62, Charts) index and the Nasdaq (up 15.32 to 2,387.98, Charts) all gained about 0.5 percent in the early going.

All three major gauges slumped Friday and lost more than 1 percent last week on mixed economic news and jitters ahead of this week's Fed meeting.

But Monday, the tone was more positive, as investors welcomed a variety of deals and rumored deals.

European bank Barclays (up $0.19 to $53.69, Charts) is reportedly in early talks with Dutch rival ABN Amro (up $3.12 to $39.36, Charts) about a possible merger, with an announcement about the status of any deal expected before the start of trading Tuesday.

Energy company TXU (up $0.97 to $63.72, Charts), which agreed to be taken private in a record $32 billion deal last month, is reportedly being wooed by a rival private equity group, led by the Blackstone Group.

In the hospital sector, Community Health Systems (up $0.00 to $36.80, Charts) is reportedly near a deal to buy Triad Hospitals (up $0.00 to $49.36, Charts), which would end an existing $4.5 billion deal for Triad to be taken private by a group of private equity funds.

ServiceMaster (up $1.67 to $15.14, Charts), a lawn care service and pest control provider, has agreed to be taken private by an investment group in a deal worth $5.5 billion in cash and debt.

Hercules Offshore (down $2.17 to $24.40, Charts) said it is buying larger rival Todco (up $5.37 to $38.15, Charts) in a $2.3 billion cash and stock deal that will unite the oil and gas drillers.

And shares of Take-Two Interactive (up $1.45 to $22.30, Charts) jumped after the video game publisher said it was considering putting itself up for sale.

Fed policy makers are meeting Tuesday and Wednesday, with a decision on interest rates expected Wednesday afternoon. The central bank is widely expected to keep interest rates steady at 5.25 percent for the sixth meeting in a row. But what the bankers say in the statement about the outlook for rates through the rest of the year will be closely watched by investors. (Full story)

Treasury prices slipped, raising the yield on the 10-year note to about 4.57 percent from 4.54 percent late Friday. Bond prices and yields move in opposite directions.

In currency trading, the dollar rose versus the euro and the yen.

U.S. light crude oil for April delivery fell 56 cents to $56.55 a barrel on the New York Mercantile Exchange.

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