Stocks look like they're going to head higher this morning, but the real issue is if they'll be able to hold on to their gains.

If they can, it will be three winners in a row for the market -- the kind of action that will signal that the market has finally worked its way out of the mire. If not, there may be more slogging ahead.

A couple of mergers in Europe could tilt things in the bulls' favor. French bank

Societe Generale

TST Recommends

announced that it will buy investment bank

Paribas

, and

Sun Life & Provincial Holdings

, U.K. subsidiary of France's

AXA

, announced that it will acquire Britain's

Guardian Royal

. This is spurring takeover speculation in the banks that should spill over into the U.S. market. The timing is good -- U.S. stocks need new leadership, and it looks like the financials are about to give it.

"The important thing is that we get these financial stocks going, and given what's happening in Europe that looks to be the case," said Bill Meehan, market analyst at

Cantor Fitzgerald

. "I don't think we're going to see any kind of meaningful pullback with foreign markets fueling bullish sentiment here."

At 9 a.m. EST, the

S&P 500

futures were up 7, about 3 above fair value and indicating a positive open. The 30-year Treasury bond was off 14/32 to 102 3/32, lifting the yield to 5.11%.

It has been a couple of weeks since the stock market has put together three winners in a row.

Late-day futures-led selling sent Tokyo's

Nikkei

down 34.07 to 14,465.18. Still, the market's good mood persists. We have seen the beginning of a consolidation process -- particularly in financial services -- whose momentum some see as inexorable.

But before this can really happen, the sticky issue of cross-shareholding will have to be tackled. The way that affiliated companies in Japan hold stakes in each other has long been seen as a barrier to restructuring. One worry is that if companies unwind these positions, there will be pressure on the stock market. According to today's

Nikkei Weekly

, the government is working on a plan to help prevent this, but it is only in the very rough stage.

The day in Hong Kong's stock market was the polar opposite of Tokyo's: Late-day futures-led buying drove away early weakness. The

Hang Seng

climbed 92.65, or 1%, to 9599.55.

The stepped-up merger activity in the financial sector was putting a shine on Europe's bourses. In Frankfurt, the

Dax

was up 118.98, or 2.3%, to 5278.94. In Paris, the

CAC

was up 90.42, or 2.1%, to 4342.22. In London, the

FTSE

was up 124, or 2.1%, to 6020.

Monday's Wake-Up Watchlist

By

Brian Louis
Staff Reporter

    Rohm and Haas

    (ROH)

    is buying

    Morton International

    (MII)

    in a cash and stock transaction valued at $4.9 billion, including the assumption of $268 million of debt. The deal will create a global specialty chemical company with combined annual revenue of $6.5 billion.

    AT&T

    (T) - Get Report

    and

    Time Warner

    (TWX)

    have formed a joint venture to offer telephone service over Time Warner's cable television wires. AT&T will own 77.5% of the venture, while Time Warner will own 22.5%. AT&T said it expects the venture will have earnings after three years with annual revenue of $4 billion. Separately, AT&T said it will sell its prepaid telephone calling cards in

    Wal-Mart's

    (WMT) - Get Report

    Wal-Mart

    and

    Sam's Clubs

    stores.

    Longtime

    Intel

    (INTC) - Get Report

    loyalist

    Gateway 2000

    (GTW)

    is preparing to introduce in March personal computers based on the forthcoming

    K6-3

    chip from

    Advanced Micro Devices

    (AMD) - Get Report

    , according to

    PC Week Online

    . Gateway has been evaluating the AMD chip, code-named "Sharptooth," for some time, according to sources,

    PC Week Online

    reported.

    Eaton

    (ETN) - Get Report

    is buying

    Aeroquip-Vickers

    (ANV)

    for $1.7 billion.

    Aetna

    (AET)

    posted fourth-quarter earnings of 98 cents a share, which includes Y2K costs, while excluding the costs, earnings came in at $1.19, both figures up from the year-ago 87 cents. The

    First Call

    14-analyst estimate called for earnings of 96 cents.

    Baker Hughes

    (BHI)

    posted fourth-quarter operating earnings of 14 cents a share, missing the First Call 25-analyst estimate of 17 cents and down from the year-earlier 34 cents.

    Hyperion Communications

    (HYPT)

    has entered into a $200 million pact with

    Lucent

    (LU)

    to install high-capacity dense wave division multiplexing optical network equipment on Hyperion's fiber-optic network serving the eastern half of the U.S.

    New England Electric System

    (NES) - Get Report

    is buying

    Eastern Utilities Associates

    (EUA)

    in a deal valued at $634 million. New England will pay $31 a share for Eastern. Eastern closed at 29 9/16 Friday.

    Oracle

    (ORCL) - Get Report

    set a 3-for-2 stock split.

    UAL's

    (UAL) - Get Report

    United Airlines

    unit,

    Trans World Airlines

    (TWA)

    and

    US Airways

    (U) - Get Report

    joined the other large domestic airlines and raised their fares over the weekend, virtually assuring the success of the first industrywide fare increase in more than a year, the

    New York Times

    reported. Late last week

    Delta Air Lines

    (DAL) - Get Report

    and

    Northwest Airlines

    (NWAC)

    raised fares.

    Warner-Lambert

    (WLA)

    announced that Melvin R. Goodes, chairman and chief executive officer, plans to retire, effective May 1. Warner Lambert said that upon the recommendation of Goodes, Lodewijk J.R. de Vink, who is currently the company's president and chief operating officer, will succeed him. No successor to de Vink will be named.

    Internet stocks are the focus of today's Heard on the Street column in

    The Wall Street Journal

    , as some market pros weigh in on the sector. Garnering positive mention:

    America Online

    (AOL)

    ,

    Yahoo!

    (YHOO)

    ,

    Amazon.com

    (AMZN) - Get Report

    and

    eBay

    (EBAY) - Get Report

    , the column said. Also getting some positive mention in the column:

    Lycos

    (LCOS)

    ,

    Broadcast.com

    ,

    Exodus

    (EXDS)

    ,

    Concentric Network

    (CNCX)

    ,

    CMGI

    (CMGI)

    and

    VeriSign

    (VRSN) - Get Report

    . On the flip side,

    K-tel

    (KTEL)

    ,

    SkyMall

    (SKYM)

    and

    Egghead.com

    (EGGS)

    receive negative mentions in the column.