Wednesday, May 23, 2007

GLOBAL MARKETS-Stocks rally on takeover talk, dollar slips

NEW YORK, May 23 (Reuters) - Global stocks vaulted higher on Wednesday, with more takeover talk driving the Dow Jones industrial average and the Standard & Poor's 500 indexes to record highs, while the dollar fell against the euro and sterling as investors braced for higher European interest rates.

Oil climbed above $70 a barrel in London after a United Nations agency report said Iran had expanded its nuclear program.

The stock rally drew investors away from U.S. government bonds, sending prices lower and pushing benchmark yields up near 3-1/2-month highs.

U.S. stocks rose after a report that Canada's Alcan Inc. may force rival aluminum producer Alcoa Inc. (AA.N: Quote, Profile , Research) into a bidding war.