Dawn Chorus: M&A activity fails to prop up Wall Street

Wall Street on Monday fell for a third day giving up early gains as concern the economy may return to recession overshadowed optimism over deal activity including Hewlett-Packard’s bid for 3Par.

The Dow Jones industrial average slipped 39 points, or 0.38%, to 10,174. The Standard & Poor's 500 Index lost four points, or 0.4%, to 1,067. The Nasdaq Composite Index fell 20 points, or 0.92%, to 2,160.

The technology sector, which rose at the open, later surrendered gains, falling 1% after HP said it had joined Dell in bidding for 3Par, the data storage company. HP declined 2% to $39.04 and shares in Dell fell 1.1% to $11.94. 3Par jumped 44.6% to $26.09 on the prospect of a bidding war.

In another move, PotashCorp rejected a BHP Billiton bid and said it was in talks with a number of third parties that were considering alternative transactions. US-listed shares in PotashCorp rose 0.4% to $150.20 and US-listed shares in BHP Billiton were 0.5% lower at $67.13.

Shares in Campbell Soup Company company rose 0.7% after it was reported that the world’s largest soup company might make a $2.3bn bid for the biscuits division of Britain’s United Biscuits. The US-listed shares of Foster’s, the Australian brewer, surged 8.3% to $5.61 after it emerged that SABMiller may make a $10.9bn bid for its beer division.

In Europe, equities rallied on Monday as the surge in M&A activity buoyed confidence in the region. The benchmark FTSE Eurofirst 300 finished up 0.7% to 1,036. The FTSE 100 index gained 0.8%, Germany's DAX was up 0.1% and France's CAC 40 was 0.8% higher.

Asian shares dropped on speculation a US home sales report due later on Tuesday will provide more evidence that growth in the world’s largest economy is faltering. Economists surveyed by Bloomberg predict new-home sales in the US stayed at the second-lowest level on record last month.