Stocks climb on bank reform, China growth and deals

Stocks extended their rally into a third week yesterday as investors sent bank stocks higher following new global regulatory requirements and China's economy continued robust growth.

A round of corporate dealmaking also gave a lift to stocks. Hewlett-Packard Co. said it will purchase security software provider ArcSight Inc. Dollar Thrifty Automotive Group Inc. said it accepted Hertz Global Holdings Inc.'s acquisition offer.

Acquisitions

Acquisitions are often a sign that companies are confident the economy is going to expand soon.

The Dow Jones industrial average rose about 56 points in afternoon trading after paring off early morning gains. If the Dow holds onto its gains, it would be the eighth time in nine days that the index has risen.

"The package of catalysts is a perfect backdrop for a market trying to confirm global economic growth," said Quincy Krosby, a market strategist at Prudential Financial.

Dealmaking and the expansion in China further reduced worries about the economy falling back into recession, Krosby said.

Stocks pulled off their highs yesterday afternoon as investors pulled money out of retail stocks ahead of the government's monthly retail sales report due out today.

Global regulators agreed to reforms that could help avoid another credit crisis that plagued financial markets worldwide in 2008 and early 2009. Banks will gradually have to increase their reserves to protect against potential losses.