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17/09/2010

S&P tops 200-day moving avg on China data, banks

NEW YORK (Reuters) – U.S. stocks advanced to their highest levels in almost six weeks on Monday, taking the S&P 500 index back near to the top of its summer range on upbeat Chinese factory data and new global banking rules.

Indexes pared some early gains as the S&P 500 moved closer to the 1,130 level, a level which the benchmark index has been unsuccessful in holding above since May. Analysts said a significant break above that point could mean more gains lie ahead.

"In a range-bound market like we've been in, we are clearly testing the top ends here," said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland. "The frustration (for traders) is we tend to get there very quickly and not on a lot of volume."

Global regulators agreed to force banks to more than triple their top-quality capital reserves in hopes of preventing another credit crisis. But the new rules, known as "Basel III," provide transition periods that could extend to January 2019 or later -- more time than many bankers expected.

Chinese factories ramped up production in August, data showed, while a key measure of money growth easily topped expectations. The data built on recently improved sentiment in U.S. markets as worries eased over whether the economy was headed back into recession.

"What it suggests -- at least with the China demand and with the European banks doing what they are doing -- is there is not a massive double dip or something really disturbing underneath the surface and that is why we are rallying," added Kruszenski.

Banks were among the top performers on Wall Street, with JPMorgan Chase & Co (JPM.N) rising 3.7 percent to $41.23 as the top boost to the Dow. The KBW Bank index (.BKX) climbed 2.8 percent.

The Dow Jones industrial average (.DJI) gained 55.02 points, or 0.53 percent, to 10,517.79. The Standard & Poor's 500 Index (.SPX) rose 9.81 points, or 0.88 percent, to 1,119.36. The Nasdaq Composite Index (.IXIC) added 35.00 points, or 1.56 percent, to 2,277.48.

Indexes were on pace for a fourth consecutive winning session, including an eighth day of gains out of the last nine for the S&P 500 and Dow. With Monday's rise, all three indexes were in positive territory for the year.

The gains sent the S&P 500 above its 200-day moving average for the first time since early August.

Another acquisition in the technology sector added to the optimism.

Hewlett-Packard Co (HPQ.N) will buy cybersecurity company ArcSight Inc (ARST.O) for $1.5 billion, the latest in a series of technology-sector transactions. ArcSight jumped 24.9 percent to $43.85, while HP edged down 0.1 percent at $38.15.

(Reporting by Chuck Mikolajczak; Editing by Diane Craft)

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