NEW YORK (AFP) - US stocks pushed higher on Tuesday, sending the Dow Jones Industrial Average and the S&P 500 to their best levels in more than five years.
US markets kept alive a rally in Europe, where shares rose in all the main exchanges helped by news of soaring investor sentiment in Germany.
Also sparking trade were reports of another possible big merger, of office supply retailers Office Depot and OfficeMax.
The Dow finished up 53.91 points (0.39 per cent) at 14,035.67, its best level since October 12, 2007.
The broad-based S&P 500 rose 11.15 points (0.73 per cent) to 1,530.94 - its highest level since Oct 31, 2007 - and the tech-rich Nasdaq Composite increased 21.56 (0.68 per cent) to 3,213.59.
Fresh merger-and-acquisition reports after last week's big merger of American Airlines and US Airways, and the Berkshire Hathaway-3G Capital takeover of Heinz, gave a spark to trade.
Office Depot gained 9.4 per cent, Office Max 20.1 per cent, on news that they are exploring an all-stock merger, while powerful rival Staples jumped 13.1 per cent.
Health-care shares slumped, led by Humana Inc, after news that government-run Medicare said it would cut payments more sharply than expected to insurers for certain services.
Humana dropped 6.4 per cent, Universal Healthcare fell 4.6 percent, and national Health Partners lost 5.0 per cent.
The Dow was led by a 2.2 per cent gain from Cisco and 2.0 percent advance from General Electric.
Google, despite facing a new challenge from Microsoft on the email side of the business, topped the US$800 level for the first time, adding 1.8 per cent to end at $806.84.
Bond prices slipped. The yield on the 10-year Treasury bond rose to 2.03 per cent from 2.01 per cent late Friday, while the 30-year one rose to 3.20 per cent from 3.18 per cent. Bond prices and yields move inversely.