US STOCKS-Wall St rises on tech M&A, rebalancing of index

* Texas Instruments offers to buy National Semiconductor

* Fed minutes could give clues on inflation, economy views

* Nasdaq OMX rebalances Nasdaq 100, Microsoft rallies

* Indexes up: Dow 0.2 pct, S&P 0.3 pct, Nasdaq 0.5 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to afternoon)

By Ryan Vlastelica

NEW YORK, April 5 (Reuters) – U.S. stocks rose on Tuesday,
led by tech shares after the proposed merger of two major
semiconductor companies and an updating of a key Nasdaq index
attracted buyers to the sector.

Investors will scour the minutes from the latest meeting of
the Federal Reserve’s policy-setting committee, expected at 2
p.m. (1800 GMT) for insight into officials’ views on rising
commodity prices and the economic outlook.

Fed Chairman Ben Bernanke said on Monday the price rises
were unlikely to persist.

A rebalancing of the Nasdaq 100 (.NDX: Quote, Profile, Research), which takes effect
on May 2, spurred traders to buy companies with increased
weightings, including Microsoft Corp (MSFT.O: Quote, Profile, Research), Intel Corp
(INTC.O: Quote, Profile, Research) and Cisco Systems Inc (CSCO.O: Quote, Profile, Research), all of which rose more
than 1 percent and were the top three percentage gainers in the
Dow.

Apple Inc’s (AAPL.O: Quote, Profile, Research) weighting was slashed, though it
remains the biggest component. The stock was flat after earlier
falling as much as 1.5 percent. For details, see
[ID:nN05109783

Texas Instruments (TXN.N: Quote, Profile, Research) late Monday offered to buy
National Semiconductor (NSM.N: Quote, Profile, Research) in a deal worth $6.5 billion, a
premium of 78 percent. National Semi shares jumped 71.5 percent
to $24.13. Texas Instruments added 2 percent to $34.80.
[ID:nLDE7340KR]

“Tech stocks are leading this big wave of merger and
acquisition activity, which people are trying to position
themselves ahead of and which I expect to continue,” said James
Swanson, chief investment strategist at Boston-based MFS
Investment Management, which oversees about $200 billion.

The deal is the latest in a string of multibillion-dollar
deals that have helped pushed stocks higher in recent weeks.
The Dow closed on Monday at its highest level since June 2008,
though volume was the lowest of the year.

“This is a powerful cycle that is setting the stage for
further gains as we go into earnings season,” Swanson said.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) was up 27.10
points, or 0.22 percent, at 12,427.13. The Standard & Poor’s
500 Index (.SPX: Quote, Profile, Research) was up 4.22 points, or 0.32 percent, at
1,337.09. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was up 15.16
points, or 0.54 percent, at 2,804.35.

The S&P 500 rose above 1,333, a closely watched level that
is double the low it reached in the financial crisis. It hasn’t
ended above that level since mid-February, and the recent light
volume has raised questions about the durability of the rally.

China’s central bank increased interest rates on Tuesday
for the fourth time since October, raising suspicions that data
next week may show higher inflation than expected in March.

In the latest snapshot of the U.S. economy, the Institute
for Supply Management showed the vast U.S. services sector grew
more slowly in March than it did in February. [ID:nL3E7F51LX]
[ID:nN04250301

KB Home (KBH.N: Quote, Profile, Research) shares dropped 2.7 percent to $11.87 after
it reported a first-quarter loss that widened from the previous
year, hurt by a fall in net orders. [ID:nL3E7F520B]

(Editing by Kenneth Barry)

US STOCKS-Wall St rises on tech M&A, rebalancing of index