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Equinox shares jumped 11.6 percent in Toronto after the announcement on Monday, a signal that investors believe an even higher bid could emerge as copper prices keep pushing into record territory.

Barrick shares shed 6.7 percent as investors questioned whether a big move into the industrial metal would make the stock less attractive to those seeking exposure to gold prices.

"My attitude is that the Chinese are coming back higher, and I'd be surprised if Barrick played ball with the Chinese at a higher price because Barrick is already getting a lot of flak from its investor base for this deal," said an Equinox shareholder. He spoke on condition of anonymity because he was not authorized to speak about the deal.

Barrick will double its position in copper with the acquisition. Prices have risen more than sevenfold in the past eight years as supplies lag the surging needs of China and other developing economies.

Equinox, a global miner listed in Toronto and Sydney, owns the Lumwana mine in Africa's rich Zambian copper belt and most of the Jabal Sayid project in Saudi Arabia.

Toronto-based Barrick offered to buy Equinox for C$8.15 a share, an 8.7 percent premium over its Thursday closing price. Barrick said the deal was worth about C$7.3 billion, including warrants and options.

The all-cash bid is 16 percent higher than the C$6.3 billion offer that Minmetals presented on April 3. Its proposal underscored China's growing prominence in the global race for resources.

"I own a lot of Equinox but I was shocked - I was thrilled but I was shocked," the shareholder said, referring to the Barrick offer.

Minmetals declined comment until it had a chance to study the details of Barrick's announcement.

Equinox had previously called the C$7-a-share Minmetals offer a low-ball bid. On Monday it said it believes the Barrick bid is superior in terms of price and its likelihood of completion.

Equinox shares on Monday closed in Toronto at C$8.37, about 3 percent higher than Barrick's offer.

"I suspect that there is room on the upside for this, and the stock is trading at a premium to the bid," said John Ing, analyst at Maison Placements in Toronto.

"In a world where commodities are trading at ever new highs, and you're looking at this project and the cash flow generated, the reality is today's prices may well be cheap in tomorrow's world," Ing said, referring to Equinox's Zambian project.

Barrick said its agreement for Equinox prevents the Australian miner from soliciting superior bids and gives Barrick the right to match any higher offers. Equinox would have to pay Barrick C$250 million to walk away from the deal, even if it accepts a higher bid.

"If the Chinese are going to respond with a higher offer ... then we'll just have to respond in due course," Barrick Chief Executive Aaron Regent told Reuters in an interview.

Regent, who has a background in base metals, sees the takeover bid as an opportunity to gain access to the Zambian copper belt at a time when copper prices are expected to keep climbing to fresh records.

"Clearly we are optimistic on the copper price, otherwise we wouldn't be doing this," Regent said, noting that existing copper mines cannot keep pace with some 800,000 tonnes a year in new demand for the red metal every year.

But the deal would also lower Barrick's exposure to gold to 80 percent from a current 90 percent.

"If you're an investor in Barrick, you're buying it for its gold leverage," said Dahlman Rose mining analyst Adam Graf. "So investors may not be pleased that Barrick is spending $7 billion of cash, levering up its balance sheet, to buy something that they don't want exposure to."

Equinox's Lumwana mine is Africa's third-largest copper operation by production and the Jabal Sayid development is due to start production next year.

The acquisition will double Barrick's current production to around 600 million pounds. Output would increase to more than 700 million pounds with the completion of Jabal Sayid in late 2012.

Barrick already owns the Zaldivar copper mine in northern Chile, the No. 1 copper-producing country, so the acquisition of Equinox would provide it with access to two of the most prolific copper-producing regions of the world.

As part of the Barrick agreement, Equinox will pull its unsolicited bid for Lundin Mining (LUN.TO). Equinox had been trying to take over the rival copper miner since February but conceded on Monday that its own shareholders would not likely have supported the deal.

Barrick said it has committed cash and financing in place for the transaction. It expects the deal to add to earnings per share and cash flow immediately.

The Dow hit a high for the year last week and is trading near a three-year high. The S&P 500 has moved to the top end of its recent trading range where it is facing resistance at its last high for the year.

Of S&P 500 companies that have reported, 75 percent beat analysts' expectations. That is just above the average over the past four quarters but well above the average of 62 percent since 1994, according to Thomson Reuters data.

Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland, said concern about oil prices was offsetting the positive momentum from earnings. He said the market could track lower as the day progresses. "I could see some profit-taking after the advance we've had," he said.

U.S. crude hit its highest level since September 2008 in early trading but turned negative when the stock market opened. Still, Brent traded above $123 a barrel on an escalation of violence in the Middle East, as well as post-election unrest in OPEC member Nigeria.

The Dow Jones industrial average .DJI dropped 29.44 points, or 0.24 percent, to 12,476.55. The Standard & Poor's 500 Index .SPX fell 2.42 points, or 0.18 percent, to 1,334.96. The Nasdaq Composite Index .IXIC gained 0.48 points, or 0.02 percent, to 2,820.64.

This week is another hectic one for earnings with 180 S&P 500 companies set to report their quarterly scorecard.

Among companies reporting on Monday, RadioShack Corp's (RSH.N) quarterly profit fell due to weakness in its T-Mobile business and higher costs related to the roll-out of its wireless kiosks in Target (TGT.N) stores. The shares fell 1.7 percent to $15.59.

Road construction equipment maker Astec Industries Inc (ASTE.O) posted better-than-expected quarterly results helped by higher asphalt and mining group revenue. The shares rose 0.9 percent to $39.40.

Traders noted that activity would likely be subdued as many major European markets remain closed over the long Easter weekend. U.S. traders are returning after markets were closed on Friday for the Easter holiday.

"It's going to be very modest volume today," said John Brady, senior vice president at MF Global in Chicago. "It's a day we want to play defense and not offense."

There was evidence of risk aversion in the market. Silver jumped more than 5 percent and gold rose to a record as investors sought shelter against a weaker dollar, while prices of grains and crude oil surged on supply fears.

The CBOE VIX volatility index .VIX rose more than 6 percent after falling last week to its lowest level since 2007.

The U.S. Federal Reserve is meeting this week and will hold the first of four press conferences per year on Wednesday. Investors are looking for clues about the direction of monetary policy when the Fed's bond buying program ends in June.

(Editing by Kenneth Barry)

The Commerce Department said on Monday sales rose 11.1 percent to a seasonally adjusted 300,000 unit annual rate, after an upwardly revised 270,000 unit pace in February.

Economists polled by Reuters had forecast new home sales climbing to a 280,000-unit pace last month from a previously reported record low 250,000 unit rate.

Compared to March last year sales were down 21.9 percent.

The market for new homes is being squeezed by competition from previously owned homes and a deluge of foreclosed properties, even though inventories of new houses are at a 43-1/2 year low.

A report last week showed there were 3.55 million previously owned homes on the market in March, well above the economy's natural rate of between 2 million and 2.5 million.

When foreclosed homes and those that are highly delinquent are taken into account, economists say supply is anywhere in the range of 8 million to 9 million.

The median sales price for a new home rose 2.9 percent last month to $213,800 from February. Compared with March last year, the median price fell 4.9 percent.

At March's sales pace, the supply of new homes on the market slipped to 7.3 months' worth from 8.2 months' worth in February. There were 183,000 new homes available for sale last month, the lowest since August 1967.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)