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In addition, the U.S. government could opt to sell more shares than first planned in the initial public offering while GM could offer additional preferred shares, the sources said.

The prospect for a higher GM share price and an increased offering size mean that the initial loss to U.S. taxpayers from the bailout of General Motors GM.UL will be more limited than initially thought.

GM had earlier filed to sell common shares for $26 to $29 each. The move to the higher range would represent an 18 percent increase at the midpoint.

An increase in the $3 billion in preferred stock that GM had first planned to offer would strengthen the automaker's balance sheet since those shares represent a new issue.

A filing with the U.S. Securities and Exchange Commission that raises the offering price range has been prepared and is expected to be filed shortly, one of the people said.

Based on a diluted share count of 1.9 billion, $33 per share would give GM a market value of about $63 billion. GM needs a market value of roughly $70 billion for U.S. taxpayers to break even. The U.S. Treasury owns nearly 61 percent of GM as a result of its $50 billion taxpayer-funded bailout.

By comparison, Ford shares hit an eight-year high on Monday, valuing the No. 2 U.S. automaker at about $59 billion.

GM earlier filed to sell about $10 billion worth of common stock at the midpoint, and $3 billion worth of preferred shares, but was seeing out-sized demand.

A higher share price reflects growing investor confidence in GM, which emerged from a U.S. government-financed bankruptcy in 2009 with sharply lower costs and higher profit potential.

"Demand is high and the range is moving up. GM is in an easy position to ask for a higher price," one of the sources said.

An over-allotment option, or so-called green shoe, would be valued at another $1.8 billion at the midpoint of the new price range. That green-shoe option is expected to be exercised, sources have said.

IPOs are typically priced at a 10 percent to 20 percent discount to reward investors for taking a risk on a new issue.

But some analysts said the initial GM IPO pricing set the value of the top U.S. automaker at an even sharper discount to what their models suggested GM was worth given its projected cash earnings and comparison with its smaller rival Ford Motor Co (F.N).

SAIC Motor Corp (600104.SS), GM's longtime partner in China, is prepared to take a stake of at least 1 percent in GM as part of the IPO if the Chinese government approves the investment, people briefed on the matter said.

In an interview published on Monday in the Wall Street Journal, Janet Yellen defended the Fed's decision this month to purchase $600 billion more of U.S. Treasury bonds in a bid to strengthen economic growth.

"The purpose of it is not to push down the dollar. This should not be regarded as some sort of chapter in a currency war," she said.

The Fed's action drew domestic and international criticism that the Fed was trying to undermine the dollar.

Yellen said the U.S. economy would continue to grow but it would take a long time to get unemployment down from 9.6 percent to 8 percent.

"I'm having a hard time seeing where really robust growth can come from. And I see inflation lingering around current levels for a long time," she said.

"If you ask me to name an unemployment rate we'd see at the end of 2012, it would probably be around 8 percent. I expect a pickup in growth next year. I don't expect a double-dip recession," she said.

Yellen told the Wall Street Journal that it was not fair to paint the Fed's bond purchase program as a cause of capital flow problems in other countries.

Asked whether she thought a domestic political backlash to the Fed's move was a threat to the central bank's independence, Yellen said: "It is our obligation to explain ourselves and the logic of what we've decided to do as clearly as possible and to address criticisms. I am not happy to see us caught up in a political debate. But Congress has assigned us tasks which we need to carry out as best we can."

(Reporting by Jeff Mason and JoAnne Allen, editing Christopher Wilson)

But Monday's upbeat report from the Commerce Department was tempered somewhat by news that a manufacturing gauge in New York state fell this month to its lowest level since April 2009.

The sturdy retail sale report offered hope for the holiday season and the broader economy, whose recovery from the worst recession since the 1930s had slowed in the summer.

"It shows the likelihood is that the holiday period is going to be a good one for retail sales," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.

Total retail sales increased 1.2 percent, boosted by purchases of motor vehicles and building materials, after advancing by 0.7 percent in September. The rise last month was almost double market expectations for a 0.7 percent gain.

It was the fourth monthly increase in retail sales and was the latest in a series of data to suggest the economy was squeezing out of the soft patch hit in the summer.

Separately, the New York Federal Reserve's "Empire State" general business conditions index fell to -11.1 in November from 15.7 in October. Economists had expected a tick down to 14 this month.

But analysts were unperturbed by the unexpected decline, pointing out that the survey was not a bellwether for the rest of the U.S. economy.

A loss of momentum in the U.S. recovery prompted the Federal Reserve this month to launch a controversial $600 billion round of bond buying, known as quantitative easing, to provide additional stimulus.

"It's a strong report and reflects that the economy is growing a bit faster than anticipated, perhaps in the 2.5 percent range," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

"If the economy grows more quickly than expected, that could prompt the Fed to tilt toward a smaller QE package over the next year."

U.S. stock index futures trimmed gains on the data, while the dollar pared gains against the euro and the yen.

Motor vehicle and parts purchases surged 5.0 percent last month, also the largest increase since March, after rising 1.5 percent in September.

Excluding autos, sales rose 0.4 percent last month after a 0.5 percent increase the prior month. Markets had expected sales excluding autos to rise 0.4 percent in October.

Building materials and garden equipment sales rose 1.9 percent last month, the largest gain since April, after increasing 1.3 percent in September.

October's retail sales report showed gains across most categories, offering hope that consumers will support the economy, despite a 9.6 percent unemployment rate. Data so far for October, including nonfarm payrolls and manufacturing, have pointed to a pick-up in the growth pace.

Ireland didn't rule out the possibility it may have to turn to Europe for help in dealing with its debt crisis on Sunday but said no application had been made for assistance yet.

Concerns over euro zone sovereign debt has pressured equities in recent weeks along with persistent concerns that China may raise interest rates. Offsetting that was stronger-than-expected growth data from Japan for the July to September period.

"Markets, after the selloff last week, are in a push-and-pull situation, with the stronger growth out of Japan on one hand, but the persistent problems in Europe on the other," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.

Caterpillar Inc (CAT.N) agreed to buy mining equipment maker Bucyrus International Inc (BUCY.O) for $8.6 billion, sending Bucyrus' shares up 30 percent to $90.60 in premarket trading. Caterpillar, a Dow component, slid 1.3 percent to $80.

Separately, EMC Corp (EMC.N) agreed to buy Isilon Systems Inc (ISLN.O), the data storage company, for $2.25 billion.

Economic indicators on tap later Monday include October retail sales, which are seen rising 0.4 percent, the same as in the previous month, along with September business inventory data and the November Empire State survey. Inventories are seen rising from the previous month, while the N.Y. survey is seen coming in at 14, down from last month's 15.73.

Pursche said investors were awaiting the retail data for direction, adding that while he was optimistic about the report, he was still cautious and expected a slow retail recovery.

S&P 500 futures rose 4.9 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 28 points, and Nasdaq 100 futures were up 11.5 points.

The S&P 500 dipped below its 20-day moving average on Friday for the first time since September 1, but managed to close above it in a sign the level -- currently just above 1,194 -- could provide strong technical support.

Lowe's Cos Inc (LOW.N) reported third-quarter profit that beat expectations by a penny, but sales missed estimates.

The dollar index .DXY rose 0.5 percent, hitting a six-week high, lifted by higher U.S. Treasury yields. Crude oil rose 0.8 percent, recovering from heavy selling on Friday.

Also in deal news, BHP Billiton (BBL.N)(BLT.L) scrapped its $39 billion bid for Canada's Potash Corp (POT.N) on Sunday after regulators rejected the deal. U.S.-listed shares of Potash slid 3.6 percent to $134.82 in premarket trading.

ArcelorMittal SA (ISPA.AS)(MT.N) is interested in buying Massey Energy Co (MEE.N), the Wall Street Journal reported.

The newspaper also reported that Takeda Pharmaceutical Co Ltd (4502.T) had explored whether it wanted to pursue a deal for Genzyme Corp (GENZ.O) but was unlikely to do so.

European shares are expected to open lower, extending losses for the fourth session, hurt by concerns over Ireland's debt woes and a sell-off in metal prices.

Bargain hunting in early Asian trade quickly gave way to more selling as Chinese stocks .SSEC struggled following a 5.2 percent slide on Friday, when fears China will lift rates gripped markets.

Analysts expect more market volatility toward the year-end as Chinese authorities are seen taking further steps to keep in check liquidity in the financial system.

"An imminent interest rate rise after recent bank reserve increase is still very likely," said a trader at a Shanghai securities house.

Reversing earlier gains, the MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS fell 0.7 percent to reach lows not seen since November 1. On Friday, the index slid 1.9 percent to post its biggest one-day percentage fall since late June.

There was also little clarity on Ireland's funding problems after the country did not rule out the possibility it may have to turn to Europe for help in dealing with its debt crisis, but said no application had been made for assistance yet.

Markets drew no comfort from the G20 and APEC meetings, which left leaders of the world's most powerful economies little closer to agreeing on how to prevent fresh crises.

Many analysts said markets had been due for a pullback regardless, as profit taking set in after a two-month-long rally and traders prepared to close their books heading into the year-end.

Australia's S&P/ASX 200 index .AXJO slipped 0.1 percent, Hong Kong's Hang Seng index .HSI shed 0.2 percent while the Shanghai Composite Index .SSEC was up 0.2 percent, having drifted in and out of negative territory.

Japan's Nikkei average .N225, however, climbed 1.1 percent as exporters such as Canon Inc (7751.T) benefited from a weaker yen and data showing Japan's economic growth accelerated in the third quarter spurred investors to buy on dips.

BHP Billiton (BHP.AX) fell 0.4 percent as investors took profits on earlier gains after the top global miner scrapped its $39 billion bid for Potash Corp (POT.TO) and said it would return $4.2 billion to investors through a share buy-back.

Some investors also described the buy-back as modest.

U.S. YIELDS CLIMB

The dollar reversed losses against a basket of major currencies .DXY, climbing 0.2 percent after the 10-year Treasury note yield rose to a two-month high at 2.823 percent.