Wall Street Higher After Caterpillar Earnings and M&A

Stocks rose on Monday adding to three weeks of gains for the S&P after strong earnings from Caterpillar and a number of proposed acquisitions boosted investor appetite for risky assets.

Caterpillar Inc (CAT.N) jumped 4.5 percent to $91.38 after the heavy equipment maker reported a quarterly profit that topped estimates on record revenues.

HealthSpring Inc (HS.N) soared 33.5 percent to $53.62 after health insurer Cigna Corp (CI.N) said it will buy the Medicare insurer for about $3.8 billion.

Oracle Corp (ORCL.O) will buy a cloud-based customer service company RightNow Technologies Inc (RNOW.O) for about 1.5 billion dollars. RightNow jumped 19.1 percent to $42.82 and Oracle was up 1 percent at $32.44.

But market gains were limited as European policymakers deferred a final decision on a strategy to fight the region's 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 are due to meet on Wednesday.

I think the market is still hoping for a good answer from the summit and the earnings are really lending support to the market ... this could be enough to break the recent trend of sort of topping off at around 1,230 and move up higher, said Andrew Fitzpatrick, director of investments at Hinsdale Associates in Chicago.

The Dow Jones industrial average .DJI jumped 71.18 points, or 0.60 percent, at 11,879.97. The Standard & Poor's 500 Index .SPX was up 10.17 points, or 0.82 percent, at 1,248.42. The Nasdaq Composite Index .IXIC put on 32.65 points, or 1.24 percent, at 2,670.11.

The S&P 500 ended Friday with a third straight week of gains on optimism over Europe and as corporate earnings came in generally as expected.

Recent gains have pushed the S&P 500 to the top of its trading range between 1,230 and 1,250, where it has struggled to advance. Many investors are looking for progress in Europe before good earnings reports can push equities much higher.

Light volume suggested investors weren't entirely convinced of the move.

Equity markets have been susceptible to rapid and violent swings in recent weeks as traders latch on to headlines out of Europe.

Google Inc (GOOG.O) has spoken to at least two private equity firms about help in financing a deal to buy Yahoo Inc's (YHOO.O) core business, the Wall Street Journal reported over the weekend, citing a source. Yahoo shares rose 1.7 percent at $16.40.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)