Stocks headed for modest gains

By CNNMoney staff

NEW YORK(CNNMoney) -- U.S. stocks were set to open higher Wednesday, as investors welcomed a $20 billion merger in the pharmaceutical sector.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were higher ahead of the opening bell. Futures measure current index values against perceived future performance.

U.S. stocks finished lower Tuesday, posting their biggest losses in more than 2 weeks.

After a long flirtation, French drugmaker Sanofi-aventis agreed to buy Genzyme, a Massachusetts-based biotech company, for $20.1 billion in cash. The deal was announced before the opening bell. Sanofi (SA) shares rose 1.4% higher, while Genzyme (GENZ, Fortune 500)'s stock edged up about 1% in premarket trading.

It was the latest in a recent spate of corporate mergers and acquisition activity, including a tie up Tuesday between NYSE Euronext and Germany's Deutsche Boerse.

"The M&A activity continues to be prevalent," said Mark Luschini, chief investment strategist for Janney Montgomery Scott, referring to the Sanofi-Genzyme merger.

He said that investors are taking this as a positive sign for the market, and it's a chief driver for pre-market trading.

Tech stocks will likely gain some traction as well after Dell (DELL, Fortune 500) reported a fourth-quarter profit that more than doubled from a year earlier, even as revenue came in just shy of estimates. Shares of Dell jumped 7% in premarket trading.

Companies: Discount retailer Family Dollar (FDO, Fortune 500) confirmed Wednesday that it had received an unsolicited proposal from Nelson Peltz's Trian Group, to buy the company for a price between $55 and $60 per share in cash.

The offer is subject to due diligence, financing and other conditions. Family Dollar said its board will review the proposal "in due course."

Comcast (CMCSA, Fortune 500) reported better-than-expected quarterly results before the opening bell.

The cable provider, which merged with GE's NBC Universal entertainment unit in January, said it earned 36 cents per share in the fourth-quarter. Analysts were looking for 32 cents per share.

Borders Group, one of the nation's largest book store chains, has filed for Chapter 11 bankruptcy and plans to close 30% of its stores.

The filing was not a surprise. Borders has been struggling with declining sales since the recession took hold in 2008. It has also been hurt by growing competition from online book sellers.

Economy: A government report showed the number of housing starts rose more than expected in January, while permits for new construction were weaker-than-forecast.

Housing starts rose 14% to an annual rate of 596,000 units last month from 520,000 units in December. Economists had expected 540,000 homes broke ground in the month.

Building permits, considered a leading indicator of activity, fell to an annual rate of 562,000 in January, versus a forecasted rate of 575,000.

The government's Producer Price Index, a measure of wholesale inflation, rose 0.8% in January. The increase was slightly larger than expected.

Reports on crude inventories and mortgage purchases are also on deck, and the Fed will release the minutes from its most recent meeting in the afternoon.

World markets: European stocks rose in morning trading. Britain's FTSE 100 gained 0.6%, the DAX in Germany edged higher 0.1% and France's CAC 40 added almost 0.8%.

Asian markets ended the session higher. The Shanghai Composite rose 0.8%, the Hang Seng in Hong Kong jumped 1.1% and Japan's Nikkei ticked up 0.6%.

Currencies and commodities: The dollar fell against the euro and the Japanese yen, but gained strength against the British pound.

Oil for March delivery gained 28 cents to $84.60 a barrel.

Gold futures for April delivery fell $1.40 to $1372.70 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury was little changed, with the yield at 3.6% To top of page

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