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Stocks Surge Monday After Storm, BofA Cuts Deal For China Construction Stake

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Image by AFP/Getty Images via @daylife

While the U.S. Northeast deals with the aftermath of Hurricane Irene, the financial tempest across the Atlantic granted markets a respite Monday after a merger of two Greek lenders cooled European debt fears for the time being.

The tie-up between Alpha Bank and Eurobank, which will surpass National Bank of Greece as the country’s largest bank by assets , was aided by an investment from a Qatari investment firm and helped temporarily soothe concerns that the sovereign debt crisis will bring down the continent’s banks.

Plenty of track lies ahead – including crucial September ratification votes on the planned bailout facility for at-risk European countries – but the Greek bank deal sent stocks higher in Europe in a rally that helped boost U.S. equities as well.

In afternoon trading Wall Street’s major indexes were at their best levels of the session, with the Dow Jones industrial average up 255 points to 11,539, the S&P 500 33 points higher to 1,210 and the Nasdaq up 82 points to 2,562.

Dow component Bank of America gained just over 8% on a deal to sell about half its stake in China Construction Bank to private investors in an $8.3 billion expected to deliver an after-tax gain of $3.3 billion. The deal lowers the bank’s risk-weighted assets, boosts its capital ratio and comes on the heels of a $5 billion investment from billionaire Warren Buffett last week.

Tech stocks were also among the market's leaders, with few in better shape than JDS Uniphase. The communications equipment maker jumped nearly 10%.

Gold prices were lower Monday -- the yellow metal dipped to $1,791 an ounce -- but that did not hurt Northgate Minerals, which was among the session's most heavily-traded stocks, leaping 32% after reaching a $1.5 billion deal to combine with fellow Canadian miner AuRico Gold.

Looking ahead, Friday's August nonfarm payrolls report is due Friday and then after the three-day Labor Day weekend comes a much-anticipated speech from President Obama that some expect will signal some type of fiscal stimulus package is in the offing, possibly targeting the housing market.