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The worlds biggest miner will be able to brandish its firepower for Potashs bid on Wednesday when it is expected to report a 50 percent jump in June-half profit to $6.9 billion on a big rebound in iron ore, copper and coal prices.

Clearly, its going to be a very good result....The balance sheet is in excellent shape and the cash flow will be significant, said James Bruce, a portfolio manager at Perpetual Investments, which owns BHP shares.

While the result is expected to be impressive, shareholders nervous about BHPs attempt to buy the worlds biggest fertilizer company want to hear more on why it wants to make a pricey acquisition in a new business for the group.

They still want to be persuaded that it makes more sense than using its cash pile to buy back shares and boost earnings per share instantly.

When youre paying $40 billion cash, at a minimum -- theyll have to up that -- theres not a lot of room for error if it doesnt quite go your way, said Peter Chilton, an analyst at Constellation Capital Management, another BHP shareholder.

No one expects a deal to go ahead at $130 a share, and a Reuters poll of 11 global shareholders in Potash indicated an offer 25 percent higher at around $162 a share could win support for a takeover.

Rival Rio Tinto is weighing a bid with a Chinese partner for Potash, a Canadian newspaper said on Tuesday. Citing unnamed sources, Canadas Globe & Mail web site said Rio Tinto is said to be considering a bid alongside a Chinese player as relations between the two sides strengthen.

BHPs low gearing and massive cash flows are key factors that have allowed it to line up $45 billion in debt funding for its bid, and analysts see those cash flows improving in the year ahead to as much as $40 billion.

BHP Billiton Chief Executive Marius Kloppers bragged about the groups strength a week ago after the groups approach Potash Corp was outed.

If I look at our EBITDA and cashflow figures,...youll see that this is a company that creates a prodigious cash flow, even against the backdrop of investments that we are already making, he told reporters on August 18.

Once the groups results are out of the way, Kloppers and his team will be free to begin their charm offensive with Potash Corp shareholders.

COUNTERBIDDERS SCARCE

On Monday, Potash talked up the chances of lining up a white knight or a counterbidder, but some potential rivals have already virtually ruled themselves out.

Potash Chief Executive Bill Doyle, who stands to earn a half-billion dollars from a deal, said the company was considering all its options including joint ventures and levering up the companys balance sheet.

He did not name a value that would be acceptable for the company, but said it should be a hell of a lot more than the price on the table.

On Monday, Brazils Vale denied talk it was lining up a bid.

Aluminum Corp of China Ltd Chalco, which is looking to diversify, said on Tuesday it was targeting coal and rare earth businesses, but sidestepped speculation it might be eyeing potash.

Chalcos investment should meet our investment criteria. We are not interested in just everything, Chairman Xiong Weiping told reporters.

Last week, Rio Tinto Chief Executive Tom Albanese declined to comment specifically on Potash, but when asked whether his company had any interest in agriculture, he said: Im not a farmer. Im a miner.

Rio Tinto sold off its potash assets to help pay down a mountain of debt two years ago, but Albanese did call potash a pretty interesting mineral.

Editing by Anshuman Daga

In a significant policy shift, the Fed announced at its August 10 policy meeting that it would begin using the proceeds from maturing mortgage securities in its portfolio to buy Treasury notes, an effort to prevent monetary conditions from slowly tightening over time.

The formal vote at the meeting -- 9 to 1 in favor -- disguised the extent of the disagreement, the Journal said, citing people familiar with the discussion.

While the meetings are attended by all 12 regional Fed presidents and five Washington-based governors, only five Fed presidents have a vote at any one time.

Governor Kevin Warsh worried a decision to reinvest mortgage proceeds into Treasuries would confuse investors and lead many to believe the Fed was paving the way to resume major purchases before it had decided to do so, the newspaper said.

Richard Fisher, president of the Dallas Fed, and others expressed concern that Fed moves might be ineffective, while Philadelphia Fed President Charles Plosser judged the action as premature, the Journal said.

The extended debate about how best to counter the slowing U.S. economy was eventually settled by Fed Chairman Ben Bernanke, who pushed successfully to proceed with the move.

Reporting by Yinka Adegoke; Editing by Tomasz Janowski

In a guest column for the Financial Times, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, said strengthening bank capital is a crucial part of financial reform.

Cleaning up bank balance sheets and strengthening the quality and quantity of capital will not be painless, Bair wrote.

But if we fail to follow through in strengthening bank capital, we risk ... exposing the global economy to the onerous and indefensible costs of another financial crisis.

Under a proposal unveiled by the group of global banking regulators on Thursday, all capital instruments other than common stocks could be written-off or converted if a bank is about to be rescued by the state or fail, hitting capital providers -- such as holders of bonds and preferred shares -- before ordinary citizens.

What is really at play here is that some in the industry are arguing their own self-interest, Bair wrote, adding that critics of higher capital requirements fail to account for the social costs created by insufficient capital cushions.

Higher capital requirements mean lower shareholder returns and reduced compensation, she said.

Bair called for a rational capital regime that extends across the global financial system.

If financial reform is about anything, it is about better aligning incentives and internalizing the costs of leverage and risk-taking, she wrote.

Reporting by Karolina Tagaris; editing by Bernard Orr

Shares in 3PAR soared 45 percent to above HPs $24-a-share offer, showing investors were anticipating a higher bid.

Analysts said 3PARs expertise in a niche area of high-end storage makes it a particularly attractive target for companies like HP and Dell. Its scarcity value means bidders might be willing to pay more than 3PAR appears to be worth on paper.

We expect to see at least one to two more iterations before this process is over -- not based on value, but on the deal being strategic in solidifying eithers position in the storage space, said Collins Stewart analyst Louis Miscioscia.

Analysts expect acquisitions to heat up as the likes of HP, International Business Machines Corp and Oracle -- hoarding large cash piles and eyeing low stock prices -- expand into new areas to offer a fuller range of products spanning hardware and software.

August has been an unusually active month for deals, following Intel Corps $7.7 billion bid for security software maker McAfee Inc last week. Companies are also buying their way to revenue growth as they chart their way out of recession, according to some investors.

What were seeing is a shift toward convergence. You have these one-stop shops forming that span everything from servers to networking and storage, said Morgan Keegan analyst Brian Freed. Youre going to see this natural consolidation of hundreds and thousands of players into a smaller number of dominant players.

HPs offer surprised analysts, who had speculated that the company would be sidelined from mergers and acquisitions after Chief Executive Officer Mark Hurd resigned this month.

Executives waved off suggestions that a leadership vacuum would keep the company out of deals. Hurd resigned August 6 after a marketing contractor alleged she had lost work because she did not have sex with Hurd, according to a source.

Dave Donatelli, one of several executives seen as contenders for the job, said the absence of a permanent CEO wasnt a problem.

I have absolutely no concerns as it relates to this deal, said the head of HPs enterprise server, storage and networking business.

HP shares fell 2 percent to $39.04. Shares of 3PAR, which made a loss on revenue of $194 million in its last fiscal year, jumped 45 percent to $26.09.

BOLD AND BOLDER

HP has diversified beyond computers with the help of bold acquisitions under Hurd, including of network device maker 3Com, tech services provider Electronic Data Systems and mobile device company Palm. Such deals have turned it into a sprawling $125-billion enterprise with over 300,000 employees.

Cross Research analyst Shannon Cross said another bidder could emerge, although HP, with a market capitalization of around $93 billion, has an advantage over Dell, which is valued at under $24 billion.

Both companies have the capacity to bid up, but HP has a significant cash balance and significant cash flow, and it has over two times the revenue of Dell, Cross said.

Some analysts said there could be more such bidding wars as large vendors seek out the remaining niche technology firms.

Bidding wars are rare in the tight-knit technology industry, where deals are often finalized behind closed doors, with exceptions like the 2009 battle between Oracle Corp and IBM for Sun Microsystems. Oracle eventually bought the computer maker for $7 billion.

In another face-off, EMC Corp beat out NetApp Inc last year to take over Data Domain, a company that specialized in reducing duplicate information on storage.

Information technology heavyweights like Cisco Systems Inc, in addition to IBM and Oracle, are vying to broaden their product lines and become one-stop shops for all of their customers technology needs.

3PAR is advised by veteran technology banker Frank Quattrone and his outfit Qatalyst Partners, according to a source familiar with the matter. Quattrone, Silicon Valleys star banker before being tried twice for attempting to hinder federal investigators, also advised Palm in its takeover by HP this year. Charges against him were dropped.

HP made a bid for 3PAR even before Dell announced its deal, said Donatelli. The company made its initial bid in July, according to the source, but held off while 3PAR was in exclusive talks with Dell.

3PAR Chief Executive David Scott used to head HPs enterprise storage business. Founded in 1999, it is headquartered in Fremont, California -- sharing a Bay Area address with Palo Alto-based HP. Dell is based in Texas.

HP said it was awaiting a response from 3PAR. Dell was not immediately available, and 3PAR declined to comment.

The $24-a-share offer for 3PAR marks a 33 percent premium to last weeks $18-per-share bid by Dell, which the storage companys board has approved. At the time, Dells bid was 87 percent over 3PARs share price of about $9.65.

HP offered terms that it said would be similar to those proposed by Dell, but would not include a termination fee. It also said its board had approved the bid.

For 3PAR, a deal with a large company like Dell or HP would give it a broader sales reach, helping it compete against rival EMC as well as smaller players like Isilon Systems Inc and Compellent Technologies Inc.

Shares in Isilon and Compellent rose over 12 percent, as the high premium of HPs offer spurred hopes for more deals.

HP said its proposed acquisition would close by the end of the year, adding it would not expect a material negative impact on earnings in the 2011 fiscal year. JPMorgan is advising HP.

Additional reporting by Paul Thomasch, Liana Baker and Franklin Paul; Editing by Edwin Chan, Lisa Von Ahn, Gerald E. McCormick and Bernard Orr

The units, Mitsubishi Heavy Industries Lt and Mitsubishi Power Systems Americas Inc, said the judge did decide to stay discovery in the suit, filed the U.S. District Courts Western District of Arkansas in May.

In the complaint, Mitsubishi had alleged that after it gained foothold in the United States in 2006, GE embarked on an anti-competitive scheme to drive Mitsubishi suppliers out of the market.

The judge did decide to stay discovery for the present, said Mitsubishi Power Systems Americas spokeswoman Sonia Williams.

Nevertheless, we are heartened by his suggestion that he may terminate the stay if he finds appropriate circumstances.

A spokesman for GE was not immediately available.

The two companies have been escalating a legal battle over wind turbine technology. In January, the U.S. International Trade Commission found that Mitsubishi Heavy did not infringe GE wind turbine patents. GE has said it will appeal. In February, GE filed a lawsuit against Mitsubishi Heavy Industries and two U.S. units, accusing them of infringing two patents used in variable speed wind turbines.

Reporting by Yinka Adegoke; Editing by David Gregorio

The company just named a new chief executive, Bennet LeBow, in June. The previous CEO, Ron Marshall, left the company in January to head supermarket chain Great Atlantic & Pacific Tea Co Inc GAP.N. In the interim, Mike Edwards had served as CEO.

Bierley, who was named chief operating officer in June, served with Borders for 12 years. He will be replaced on an interim basis by Glen Tomaszewski, a Borders vice president, while the company searches for a permanent CFO.

Borders has been working to lower debt and improve sales in the midst of widespread weakness for traditional book sellers as more consumers shift to digital books.

Last month, it launched its own e-bookstore to catch up to rivals such as Barnes & Noble Inc BKS.N and Amazon.com Inc AMZN.O, whose Kindle is believed to be the top-selling e-reader.

Borders shares closed down 1.65 percent at $1.19 on the New York Stock Exchange.

Reporting by Alexandria Sage; editing by Andre Grenon

Wall Street is anticipating a fiscal third-quarter loss of 14 cents per share. That is narrower than last years loss of $2.93 but still weak compared with rivals PulteGroup Inc PHM.N and D.R. Horton Inc DHI.N, which reported profits in their most recent quarters.

The end of Tolls fiscal second quarter coincided with the expiration of the federal homebuyer tax credit.

That means the coming results provide a glimpse of an entire quarters worth of new home demand not boosted by the credit, which benefited Toll Brothers business by helping its customers find buyers for their homes, said Morningstar analyst Eric Landry.

Sentiment in the homebuilder sector has just gone completely south since the tax credit expired, Landry said. Its been a 180-degree change.

Wednesdays results will reflect the post-tax credit reality to a degree that Tolls rivals have yet to experience, say analysts and investors.

Well see a real slowdown in new orders, said Thomas Villalta, whose Jones Villalta Opportunity Fund owns Toll Brothers shares. He sees the company posting a bigger loss than Wall Street expects.

Its going to be rocky over the next six months and this quarter is going to be a rocky quarter, he said.

Even an admittedly optimistic orders estimate from Ticonderoga Securities analyst Stephen East has them slipping 10 percent to 751 units, according to a note to clients.

East sees operating margins at a solidly negative 2.9 percent, down slightly from last year.

These days, builders margins are determined by the amount of new and cheaper land versus expensive legacy land they are using, Landry said.

Because Toll Brothers tends to build on land that is closer to job centers and harder to move through the government approvals process, it might be using relatively less new land than the competition.

Toll shares have been a bit of a disappointment over the last year and a half, Villalta said. We thought we had gotten in at fairly reasonable prices, yet the stock has done nothing since weve owned it. Its probably even down slightly.

Of course, share prices of all the biggest homebuilders have fallen since the beginning of the year. Tolls are down 14.2 percent at $16.29 per share.

But in the long run, both Landry and Villalta see value in the company.

Tolls expensive land will be a competitive advantage later although it is dragging down margins now, Landry said.

The companys development process takes longer than the guys who just go and knock down a corn field, he said, but future buyers will pay high prices for those desirable locations.

Were not going to try to pick the bottom but we think people will wake up a few years from now and see significant gains in this area and in Toll Brothers, Villalta said.

Reporting by Helen Chernikoff, editing by Matthew Lewis

The company, which has protected U.S. officials in Iraq and Afghanistan and is now known as Xe Services, had been accused of unauthorized weapons exports and defense services deals for end users in a number of countries.

The State Department said that with the deal, which was first reported by the New York Times, the company will no longer been deemed ineligible for future contracts with the U.S. government.

The Department is satisfied that the company has taken the necessary steps to address the causes of its export control violations, the State Department said in a statement, adding that $12 million of the penalty would be suspended to help make up for some of the companys compliance measures.

The Department has determined that the policy of denial is no longer necessary.

The privately held company, based in North Carolina, is up for sale.

The Times said that the violations included illegal weapons exports to Afghanistan, making unauthorized proposals to train troops in southern Sudan and providing sniper training for police in Taiwan.

The settlement does not resolve other legal troubles still facing the company and its former executives and other personnel, include the indictments of five former executives on weapons and obstruction charges, a federal probe into whether company officials tried to bribe Iraqi officials, and the arrest of two former Blackwater guards on federal murder charges in the killing of two Afghans.

A U.S. court has dismissed charges against Blackwater guards accused of killing 14 Iraqi civilians in Baghdad in 2007. A federal investigation into Blackwaters weapons shipments to Iraq brought guilty pleas from two former Blackwater employees.

The Times noted that the company lost its largest federal contract last year, providing diplomatic security for U.S. Embassy personnel in Baghdad, but it still has existing contracts to provide security for the State Department and CIA in Afghanistan.

Reporting by Andrew Quinn; Editing by Cynthia Osterman

Yonni Sebbag, 30, faces a possible 27- to 33-month prison term under federal sentencing guidelines. Sebbag, a citizen of Morocco, has been held in custody since his May 26 arrest.

Last May, prosecutors accused Sebbag and his girlfriend Bonnie Hoxie, an assistant to Disneys corporate communications chief, of trying to sell inside information about the company to more than 30 U.S. and European hedge funds. Several funds reported these efforts to authorities.

At Mondays hearing in Manhattan federal court, Sebbag told U.S. Magistrate Judge James Cott: From March 2010 to May 26, 2010, I agreed with others to commit securities fraud and wire fraud.

I obtained confidential non-public information about the Walt Disney Company and sent it to outside investors by email.

Investigators alleged that Hoxie used her position to gain confidential information about Disney, and that she and Sebbag would then email the hedge funds, hoping to trade the information for fees.

This information included details about upcoming financial results and possible advanced talks over a sale of Disneys ABC television network, prosecutors said. Disney in May said references to such talks were and are false.

The U.S. Securities and Exchange Commission filed separate civil charges in May.

While it was unclear from the complaints what motivated the duo, the SEC said Hoxie told Sebbag she had had her eye on a $700 Stella McCartney designer handbag and a pair of shoes.

The criminal case was brought in New York rather than Los Angeles because many of the hedge funds were in New York.

The case is U.S. v Hoxie et al, U.S. District Court, Southern District of New York, No. 10-mag-1113.

Reporting by Grant McCool and Jonathan Stempel, editing by Matthew Lewis

The payment reduces the size of the Federal Reserve Bank of New Yorks credit facility by that amount to about $30 billion. The outstanding principal balance, excluding fees and interest, is now at just over $15 billion.

At $15 billion, the balance is at its lowest level since the March 2009 restructuring of government aid, a source told Reuters previously. A previous low of $17 billion was reached in December after AIG gave the Fed preferred interest in two special purpose vehicles created to hold its foreign life insurance business.

AIG, which is nearly 80 percent owned by the U.S. government, was rescued in September 2008. Besides the Fed credit facility, the U.S. Treasury Department holds about $49 billion in preferred shares that AIG must repay.

The Fed repayment comes after International Lease Finance Corp, AIGs aircraft leasing unit, sold $4.4 billion in debt to investors and used the bulk of the proceeds to repay $3.9 billion in government loans.

AIGs shares rose 1.2 percent to $35.60 during morning trading on the New York Stock Exchange.

Reporting by Paritosh Bansal, editing by Gerald E. McCormick

HP bid $24 a share for 3PAR, about 33 percent more than Dell planned to pay in a deal announced a week ago. At the time, Dells bid for 3PAR, which makes storage products that use virtualization technology to allow companies to boost efficiency, marked an 87 percent premium to its share price.

Representatives from 3PAR and Dell were not immediately available for comment on the HP move.

HP, faced with turmoil in its top ranks after the resignation of Chief Executive Officer Mark Hurd, said its board had approved the bid.

Shares of 3PAR, which was founded in 1999 and posted revenue of $194 million in its last fiscal year, jumped 37 percent in premarket trading after the HP announcement. Shares of HP slipped 1 percent.

The competing bids for 3PAR come as technology heavyweights like International Business Machines Corp IBM.N and Oracle Corp ORCL.O have been boosting investment in cloud computing and virtualization technology, hoping to take advantage of corporate demand for services that manage the flow of data and information.

Cloud computing is technology that allows users to access data and software over the Internet and corporate networks.

Because Dell offered such a steep premium for 3PAR, industry analysts had doubted a competing offer would emerge. The boards of Dell and 3PAR had approved terms of the deal.

HP said 3PAR would be an ideal fit and offered terms that it said would be similar to those proposed by Dell but would not include a termination fee.

HP said its proposed deal would close by the end of the year.

Reporting by Paul Thomasch; Editing by Lisa Von Ahn and John Wallace

Kenneth Feinberg who will run the fund said those who sustained financial loss because of the spill could claim for damages and he promised claimants more generous treatment than they would get if they sued the energy giant for damages.

The goal here is to try and explain to eligible claimants: It is not in your interest to tie up yourself and the courts in years of uncertain protracted litigation when ... there is a more efficient quick alternative Feinberg told a news conference on Sunday.

The goal will be to pay any individual claim within 48 hours of the claim being finalized and seven days for any business claim, he said.

BP set up the fund in June under pressure from the White House to come up with a remedy for the losses sustained in the fishing, tourism and other industries on the Gulf of Mexico coast because of the leak that began in April and was capped in July.

Feinberg was named its administrator because of the reputation for fairness he acquired administering the 9/11 fund and determining executive pay for companies bailed out by the government during the recession.

But the spill fund may provide an even tougher challenge, according to insurance experts who said calculating claims for businesses would be particularly difficult.

For the next six months, anyone claiming an emergency payment can also sue BP at a future date but beyond that period claimants would forfeit the right file against the company, Feinberg said.

The position is controversial. Floridas Attorney General Bill McCollum issued a statement last week saying the ruling favors BP and weakens provisions advocated by state attorney generals along the coast.

LESS GENEROUS

The current process appears to be even less generous to Floridians than the BP process. Such an outcome is completely unacceptable, McCollum said in a statement.

In his defense, Feinberg said the idea for the cut-off point was his rather than BPs.

I am beholden to neither the administration nor BP. I am entirely independent, Feinberg said, adding that entry into the compensation process was voluntary.

He said no decision had been taken on whether people who claimed after the six-month window would be able to sue other companies involved with the rig that exploded April 20, killing 11 workers and triggering the spill.

So far, BP has paid $375 million in compensation, Feinberg said, though that money was separate from the $20 billion.

Even so, a flood of new claimants were expected to hit the 35 offices set up in the five coastal states of Texas, Louisiana, Mississippi, Alabama and Florida when they opened for business.

Claimants could also apply by mail and online at www.gulfcoastclaimsfacility.com.

Editing by Alan Elsner

HSBC and Anglo-South African insurer Old Mutual, which owns a controlling stake in Nedbank, said in separate statements on Monday they were in exclusive talks about the deal.

Old Mutual said HSBC could purchase up to 70 percent of South Africas fourth-largest bank, an acquisition that could be worth about 49.9 billion rand $6.8 billion, given Nedbanks current market value.

It was not immediately clear whether HSBC would get the necessary clearance from South Africas regulators to buy a stake in the bank. HSBC already has a presence in South Africa, offering commercial banking and offshore personal banking.

For HSBC, which has lagged behind rival Standard Chartered

in Africa, the acquisition would bulk up its presence as more of its Chinese customers are looking to do deals on the resource-rich continent.

HSBC also faces a growing threat from South Africas Standard Bank, which is 20 percent owned by Chinas Industrial and Commercial Bank of China, and is positioning itself as a gateway to Africa.

This is the right thing for HSBC to do if it wants to focus on emerging markets, said Dominic Chan, an analyst at BNP Paribas in Hong Kong.

Trade between Africa and China has been growing very rapidly, and HSBC doesnt have the same presence there as Standard Chartered, which makes this buy especially crucial if it wants to continue expanding there.

South Africas head of bank regulation, Errol Kruger, told Reuters on Monday it was too early to comment on the deal.

They still have to submit all the applications they need to go through and then well need to apply our minds to it, he said in a telephone interview.

Shares of Nedbank and Old Mutual surged on the news, while HSBC edged higher. South Africas rand rose slightly in early trade on Monday, helped by the news of the potential deal.

RUMP STAKE

Old Mutual CEO Julian Roberts told Reuters that the group aimed to unload its entire 52 percent stake in Nedbank but the exact amount it sells hinged on minority shareholders.

Nedbank would remain listed in South Africa and Roberts said Old Mutual would not have gone into exclusive talks without hope of regulatory approval.

If were left with a rump stake, that would be fine and we would manage that into the future, he said.

Media reports had previously said that Standard Chartered may bid for Nedbank. Roberts said Old Mutual had been in talks with other parties, but declined to elaborate further. He also declined to give information on the potential value of the deal.

A Standard Chartered spokesman in London declined to comment, but a source close to Standard Chartered said it had considered the Nedbank stake but was concerned about overpaying.

Nedbank currently trades at about 1.3 times its forward 12-month book value, versus 1.6 times for bigger rival Standard Bank and 1.3 for HSBC, according to Thomson Reuters StarMine.

BNP Paribas Chan said he estimated 1.8 to 1.9 times the book value as a reasonable price for the deal.

The sale would help Old Mutual in its strategic overhaul to slim down its complicated structure and pay down debt.

Nedbank, which said in a statement that HSBC was an attractive international banking partner, has been struggling with a money-losing retail unit.

The bank this month posted flat first-half earnings and said it would struggle to meet its medium-term forecasts.

Shares of Nedbank surged 6.7 percent to 139.90 rand in Johannesburg, while Old Mutual gained 4.1 percent in London.

HSBC was up 0.7 percent, while the rand firmed to 7.2930 against the dollar, from 7.32 before the news.

HSBC is being advised by Lazard, while Lexicon, Rothschild and Bank of America Merrill Lynch is advising Old Mutual. Credit Suisse Group is advising Nedbank. Additional reporting by Tiisetso Motsoeneng in JOHANNESBURG; Sudip Kar-Gupta and Quentin Webb in LONDON and Alison Leung in HONG KONG; Editing by Marius Bosch and Mark Potter

At 0846 GMT 4:46 a.m. EDT, futures for the Dow Jones, S&P 500 and Nasdaq were up between 0.2 and 0.3 percent.

The FTSEurofirst 300 index of leading European shares was up 0.4 percent at 1,033.86 points, with miners gaining on hopes that Australias election result means plans for higher taxes will be scrapped.

Campbell Soup Co, the worlds largest soup maker, is considering making a 1.5 billion pound $2.3 billion break-up bid for Britains United Biscuits, the Sunday Times reported.

Recent M&A activity includes Intel Corps move to acquire software maker McAfee Inc for $7.7 billion.

There are no major U.S. companies due to report. Results due later in the week include those from bookseller Barnes & Noble, expected to report a quarterly loss on Tuesday.

Economic data due this week include existing housing sales on Tuesday, set to show a 12 percent decline.

U.S. stocks slipped on Friday and the S&P 500 and Dow fell for a second straight week on persistent concerns the recovery has tapered off. For the week, the S&P 500 was down 0.7 percent and the Dow slipped 0.9 percent, while the Nasdaq gained 0.3 percent. It was the second week of declines for the S&P and the Dow.

Even so, major indexes came off Fridays lows as some investors homed in on positive outlooks in the tech sector and used recent M&A news as an excuse for late-day buying.

Reporting by Brian Gorman; Editing by Michael Shields