Stocks skyrocket to start July

NEW YORK (CNNMoney.com) -- Stocks got off to a strong start Monday as investors cheered more merger news and a better-than-expected report on manufacturing activity.

The Dow Jones industrial average (up 66.34 to 13,474.96, Charts) gained 0.7 percent. The Nasdaq composite index (up 18.97 to 2,622.20, Charts) rose 0.8 percent. The Standard & Poor's 500 index (up 9.46 to 1,512.81, Charts) was 0.8 percent higher.

Major gauges traded in seesaw fashion last week, but got off to a positive start Monday thanks to a flurry of deal news, despite lighter volume with many traders on vacation. U.S. markets are set to close early Tuesday and all day Wednesday due to the July 4 holiday.

In merger news, Canadian telecommunications operator BCE (up $1.32 to $39.11, Charts), the parent of Bell Canada, agreed to be acquired for $32.6 billion and taken private by a group including Ontario Teachers' Pension Plan, Providence Equity Partners Inc. and Madison Dearborn Partners. An additional $15.9 billion in assumed debt makes it the largest private equity buyout in history.

Health care services provider Manor Care (down $1.04 to $64.25, Charts) said it agreed to be taken private by private equity firm Carlyle Group for $6.3 billion.

AT&T (down $0.23 to $41.27, Charts, Fortune 500) said Friday it will buy wireless communications services company Dobson Communications (up $1.30 to $12.41, Charts) for $2.8 billion in cash.

Wesfarmers, the owner of Australia's largest hardware chain, has agreed to buy retailer Coles Group Ltd. for about $17.7 billion in cash and stock, making it Australia's biggest takeover.

And Richard Branson's Virgin Media is also reported is in deal talks. The company could be bought by private equity for $10 billion or more, according to published reports.

In economic news, the Institute of Supply Management's monthly index came in at 56 in the month, after a 55 reading in May. Any reading above 50 indicates growth in the sector. Economists surveyed by Briefing.com expected the index to remain unchanged at 55.

Treasury prices were up slightly, with the yield on the 10-year note slipping to 5.01 percent from 5.02 percent late Friday.

Oil prices fell in early trading. U.S. light crude lost 84 cents to $69.84 a barrel on the New York Mercantile Exchange.

In global trade, European markets slipped in early trading as investors worried about problems in the subprime sector and inflation. Concerns about terrorism also rattled investors as authorities tightened security after failed attacks in Scotland and London.

Markets in Asia mostly finished lower.

The dollar was lower against the euro and the yen in early trading.