Stocks rise after $19 billion acquisition spree (AP)

NEW YORK – Stocks rose for a third straight day Monday after Google and other companies announced acquisitions totaling more than $19 billion. The return of "Merger Monday" on Wall Street made investors more optimistic about the future. So did a report that showed Japan's economy shrank less than feared following the March 11 earthquake and tsunami. That helped temporarily ease worries about the U.S. economy.

The Dow Jones industrial average rose 113 points, or 1 percent to 11,383 at 12:02 p.m. in New York. The Standard & Poor's 500 index rose 14, or 1.2 percent, to 1,193. The Nasdaq composite index rose 19, or 0.8 percent, to 2,527.

Markets may have stabilized, but financial analysts warn investors not to assume that stocks have fully settled down after last week's swings. The S&P 500 rose or fell by at least 4 percent for four straight days, something that hasn't happened since November 2008. The first-ever downgrade of the U.S. credit rating triggered the volatility. It was exacerbated by concerns that Europe's debt problems are worsening and that the U.S. economy is weakening.

"You might have these moments of quiet, but the debt crisis in Europe did not go away," said John Hailer, chief executive officer of Natixis Global Asset Management, which manages more than $700 billion under the Loomis Sayles and other brands. "Our issues with the debt, with what our tax policy is going to be going forward, our unemployment did not go away."

"We are probably going to have to look at some very different levels of volatility than what a lot of investors grew up with over the last 25 to 30 years," he said.

Hailer said investors seeking protection from volatility have poured dollars into mutual funds that bet on falling stock prices and use other alternative strategies. About 20 percent of all new investment dollars coming into Natixis are for such funds, up from 8 percent in 2009.

More swings could be on the way this week. The leaders of France and Germany meet Tuesday to discuss Europe's debt problems. Spain and other countries have borrowed so much that they may need help to repay their bills. Investors on Tuesday will get an update on how Spain's economy did during the second quarter.

On Monday, a spate of corporate deals dominated the news. The biggest was Google Inc.'s $12.5 billion cash purchase of wireless phone maker Motorola Mobility Holdings Inc. It is also the biggest acquisition in Google's history. No. 2 was its $3.2 billion purchase of DoubleClick in 2008. Motorola Mobility's stock jumped percent 56 percent. Google fell 2.4 percent.

Among other deals: Time Warner Cable Inc. said it will pay $3 billion in cash for Insight Communications Co., which has more than 750,000 cable customers in the Midwest. Agribusiness conglomerate Cargill said it will buy Dutch animal nutrition company Provimi for $2.16 billion. And in the energy industry, offshore driller Transocean Ltd. said it will buy Aker Drilling of Norway for $1.43 billion in cash.

Companies across the United States have accumulated a record amount of cash since the recession ended. They have increased their cash reserves every quarter for more than two years, and businesses in the S&P 500 index had a total of $963.3 billion at the end of March, according to the most recent data from Standard & Poor's.

Investors have been waiting for companies to use some of that cash on acquisitions, dividend increases and stock buybacks. Many financial analysts believe that companies are more confident about the future if they're willing to buy other businesses. So a series of acquisition announcements tends to send stocks higher.

The growing cash hoard has been the result of stronger profits. Companies have kept costs low by being slow to hire. Revenue, meanwhile, is growing, particularly from overseas customers. For the 460 companies in the S&P 500 that have reported second-quarter results, total earnings are up 12 percent from a year ago.

Some companies are looking to pare back. Bank of America Corp. said it will sell its $8.6 billion Canadian credit-card business to TD Bank Group. The bank will also get out of the credit card business in Britain and Ireland. The deals follow others that Bank of America made to move out of foreign credit cards, and they should help Bank of America improve its balance sheet

Bank of America rose 5.4 percent, part of a rally for the overall industry. Financial stocks in the S&P 500 rose 2.1 percent, third-best among the 10 industries that make up the index.

No. 1 was the energy industry, which rose 2.6 percent. Energy stocks benefited from a rise of $1.64 per barrel in crude oil to $87.02.

Asian and European markets rose earlier Monday after Japan said its economy shrank at just a 1.3 percent annual rate between April and June. That's less than half the drop that economists expected following the earthquake, tsunami and nuclear crisis that struck the country in March.

Still, investors have more reason to worry about the weak U.S. economy.

Manufacturers in New York told the Federal Reserve they're more pessimistic about future growth. Manufacturing has been one of the country's strongest industries since the recession ended in 2009, but growth began to slow in March. Manufacturing nationwide barely grew in July.

Cosmetics company Estee Lauder Cos. fell 6.8 percent after it forecast earnings for the upcoming year that were below Wall Street's expectations. It also said its net income rose 72 percent last quarter on strong sales growth to China, Russia and the Middle East.

Lowe's Cos., the second-largest home improvement retailer, fell 1.4 percent after said its net income was roughly flat last quarter on a 1 percent rise in revenue.

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Sectarian killing spree kills 30 in Syria (AP)

BEIRUT – The discovery of three corpses with their eyes gouged out set off a sectarian killing spree that left 30 people dead in a chilling sign that the Syrian revolt against President Bashar Assad is enflaming long-simmering religious tensions.

The opposition accused the president's minority Alawite regime of trying to stir up trouble among the Sunni majority to blunt the growing enthusiasm for the four-month-old uprising. The protesters have been careful to portray their movement as free of any sectarian overtones.

The killings over the weekend in the central city of Homs "undermine the peaceful nature of the revolution and serve its enemies who want to turn it into a civil war," said Rami Abdul-Rahman, the director of the London-based Syrian Observatory for Human Rights.

Homs-based activist Mohammad Saleh said the violence began Saturday after the corpses of three Alawite government supporters were dumped in Homs with their eyes gouged.

The men had gone missing two days earlier.

On Sunday, six bodies from various sects were found in the city, apparently in revenge attacks, Saleh said. Pro-government Alawite thugs called shabiha then went on a rampage, another activist said, opening fire in predominantly Sunni neighborhoods of Homs.

The dead included a 27-year-old mother of three, who was shot as she left her home, and a man in his 50s who was struck by a bullet on his balcony, a resident said.

"I was at the man's funeral yesterday, all he did was go out on his balcony," he said, adding that civilians have started setting up roadblocks to protect their neighborhoods. He spoke on condition of anonymity for fear of reprisals.

Up to 40 shops were vandalized or burned, he said.

"It was a catastrophe, the situation could easily have slipped out of control," the resident said, adding the situation calmed down Monday but tensions were high.

Sectarian warfare is among the most dire scenarios facing Syria.

The country is home to more than 1 million refugees from neighboring Iraq, who serve as a clear testament to the dangers of regime collapse and fracture in a religiously divided society. They also see the seemingly intractable sectarian tensions in Lebanon as a cautionary tale.

"The Assad regime itself has a vested interest to portray the protest movement as one which is violent led by criminals, terrorists and by external actors," said Anthony Skinner, associate director at Maplecroft, a British-based risk analysis company.

"This is potentially an issue that Assad can manipulate to try and divide the momentum that we have seen building up," he said.

The Assad regime has long held together a fragile jigsaw puzzle of Middle Eastern backgrounds — Sunnis, Shiites, Alawites, Christians, Kurds, Druse, Circassians, Armenians and more.

An offshoot of Shiite Islam, the Alawite sect represents about 11 percent of the population in Syria. The sect's longtime dominance has bred seething resentments, which Assad has worked to tamp down by enforcing a strictly secular identity in Syria.

But now, Assad is relying heavily on his Alawite power base to crush the uprising, particularly amid rumors that Sunni army conscripts have been refusing to fire on civilians.

He has tried to dampen enthusiasm for the revolt by blaming the unrest on "armed gangs" and a foreign plot to sow sectarian strife.

Minority groups have been receptive to Assad's argument that only his regime can guarantee law and order, in part because they fear being marginalized if the Sunni majority takes over.

In part due to the shabiha's role in the crackdown, Syria's sectarian tensions have been laid bare for the first time in decades — a taboo subject because of the Assad family's 40-year dynasty of minority rule. Assad's father and predecessor crushed a Sunni uprising in 1982, shelling the town of Hama and killing tens of thousands in a massacre that is seared into the minds of Syrians.

On Monday, the Interior Ministry said it will deal firmly with "terrorist groups" and armed gunmen who are carrying out terrorist acts and torching private and public property.

Human rights group say more than 1,600 people, most of them unarmed civilians, have been killed in Assad's crackdown on a largely peaceful protest movement. The government disputes that toll and blames the unrest on gunmen and religious extremists looking to stir up sectarian strife.

Some 350 soldiers and policemen also are believed to have died in the unrest.

The Syrian Observatory for Human Rights and Saleh, the Homs activist, put the death toll in Homs at 30 and said they have the names of the victims.

But another activist in Homs said he's not certain if the death toll was as high as 30 and said the number could be lower.

Also Monday, Syria's pro-government Al-Watan newspaper said that the Qatari embassy in Damascus has suspended operations because of recent protests outside the embassy against Al-Jazeera's coverage of the Syrian uprising. Al-Jazeera is based in Qatar.

Syria accuses Al-Jazeera and other media of incitement and fabricating events in their coverage of the protests.

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Zeina Karam can be reached on http://twitter.com/zkaram

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