Stocks rose on Monday, adding to three weeks of gains by the S&P 500, after strong earnings from Caterpillar and some proposed acquisitions boosted investor sentiment.

Equities have risen on optimism over a possible resolution to Europe's sovereign debt crisis and a reduced likelihood of a U.S. recession after stronger-than-expected corporate results and economic data.

Caterpillar Inc jumped 5.6 percent to $92.30 and led the Dow higher after the world's largest heavy equipment maker reported a 44 percent jump in quarterly profit on record revenues.

When a big-name company like this reports numbers like these, that will help turn around talk about another recession, said Andrew Bodner, president of Double Diamond Investment Group in Parsippany, New Jersey.

News like this, along with the turnaround we've seen in some economic indicators, is why the markets have moved up like they have.

The Dow Jones industrial average <.DJI> was up 78.41 points, or 0.66 percent, at 11,887.20. The Standard & Poor's 500 Index <.SPX> was up 12.13 points, or 0.98 percent, at 1,250.38. The Nasdaq Composite Index <.IXIC> was up 53.47 points, or 2.03 percent, at 2,690.93.

Equities were also boosted by proposed acquisitions. Oracle Corp agreed to buy RightNow Technologies Inc , which provides cloud-based customer services software, for about $1.5 billion, or $43 per share.

Cigna Corp will acquire HealthSpring Inc , a Medicare health provider, for $3.8 billion, or $55 a share.

RightNow gained 19 percent to $42.85 while HealthSpring jumped 33.6 percent to $53.66.

The S&P has climbed almost 14 percent since October 3, and recent gains have pushed the broad index to the top of its trading range between 1,230 and 1,250 where it has struggled to advance due to conflicting headlines from Europe.

Investors looked for progress in Europe before earnings reports were enough to push the market solidly higher. Light volume suggested they still weren't convinced as uncertainties about Europe continued.

European policymakers deferred a final decision on a strategy to end a sovereign debt crisis as they neared agreement on bank recapitalization and on how to leverage a rescue fund to try to stop bond market contagion. The leaders were due to meet again Wednesday.

Google Inc has spoken to at least two private equity firms about help in financing a deal to buy Yahoo Inc's core business, the Wall Street Journal reported, citing a source. Yahoo shares rose 2.9 percent at $16.59.

(Editing by Kenneth Barry)

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