Bank Gains Lift Wall Street

Financials and homebuilders are strong. Dow stocks McDonald's and Honeywell rise.
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Updated from 4:13 p.m. EST

Stocks in the U.S. finished Monday with gains as the financials and the homebuilders led Wall Street higher a day ahead of the

Federal Reserve's

last policy meeting of 2007.

The

Dow Jones Industrial Average

was up 101.45 points, or 0.7%, to 13,727.03, and the

S&P 500

was better by 11.30 points, or 0.8%, at 1515.96. The

Nasdaq

rose 12.79 points, or 0.5%, to 2718.95.

Among the headliners, Switzerland's

UBS

(UBS) - Get Report

reached a deal to get a capital infusion worth more than $11 billion from investors in Singapore and the Middle East, allowing stockholders to look past its announcement that it will write down an additional $10 billion to reflect declines in its subprime positions.

Shares of UBS were up 2.3% to $51.66.

Another winner in the financial space was

JPMorgan

(JPM) - Get Report

, which improved 2.9% to $47.42 after being the subject of a positive report in

Barron's

over the weekend.

Elsewhere, bond insurer

MBIA

(MBI) - Get Report

soared 13% to $33.95 on word it will get $1 billion in capital from the private-equity firm Warburg Pincus.

Those gains helped the broader sector make headway. The KBW Bank Index was up 2.8%, and the NYSE Financial Sector Index climbed 1.8%. The Amex Securities Broker/Dealer Index advanced 2.5%.

The financials have been the market's primary focus for months, and traders are eagerly awaiting the outcome of the Fed gathering Tuesday, when the central bank is widely expected to cut the fed funds target rate by at least 25 basis points from the current 4.50%.

Already, the Fed has eased twice, but many investors believe more is needed in order to prevent the credit crisis from leading to a recession. According to their statements, some Fed bankers appear to agree with that position, but others are concerned about the prospects for inflation.

The Philadelphia Housing Sector Index was another of the top performers, increasing 2.7%. Most subgroups ended to the upside, but drug stocks lagged.

Aside from JPMorgan, two other Dow-component stocks made news.

McDonald's

(MCD) - Get Report

was higher by 2.9% as its global comparable-store sales rose 8.2% in November. Systemwide sales for McDonald's restaurants worldwide increased 16.3% last month, or 9.6% in constant currencies.

Honeywell

(HON) - Get Report

said its board approved a 10% hike in its regular annual dividend to $1.10 from $1 a share, effective with the first-quarter payment. Its stock rose 1.7%.

Separately, a round of acquisitions was being planned, and three of the deals involve U.S. companies being taken over by foreign buyers.

In one, Japan-based drugmaker Eisai will buy biotech

MGI Pharma

(MOGN)

for $41 a share, or roughly $3.9 billion. MGI was up 19.6% to $40.

Also,

Adams Respiratory Therapeutics

(ARXT)

will become part of England's Reckitt Benckiser in an arrangement worth $2.3 billion, or $60 a share. Adams jumped 35.8% to $59.30.

The other pact will see

Claymont Steel

(PLTE)

be bought by Russian steelmaker Evraz for $564.8 million, or $23.50 a share. That sent Claymont shares up 5.9% to $23.29.

As for research calls, UBS downgraded

Palm

(PALM)

to sell from neutral, and Jefferies cut its rating on

Red Hat

(RHT) - Get Report

. Merrill Lynch upgraded

Novellus

(NVLS)

.

Outside the stock market, Treasury prices were soft. The two-year note was down 4/32, yielding 3.17%, and the 10-year note was losing 12/32, yielding 4.15%. The 30-year bond was off 25/32 in price, yielding 4.62%.

The dollar was weaker against many other currencies, but it gained on the Canadian dollar.

Commodities were mixed. Oil surrendered 42 cents to $87.86 a barrel, and gold was up $13.30 at $813.50 an ounce.

Asia's major markets pulled back overnight. Tokyo's Nikkei was off 0.2%, and Hong Kong's Hang Seng gave back 1.2%. In Europe, London's FTSE was down 0.2%. The Paris Cac was 0.6% higher, and Frankfurt's Dax tacked on 0.5%.