Dow Jones

THE Dow Jones Industrial Average closed above 11,000 for the first time in a year and a half on rising hopes about the US economy.

The Standard & Poor's 500 index came within a point of hitting its own milestone of 1,200 during trading but closed just short of that mark.

A loan agreement for Greece allowed US investors to focus on domestic economic and corporate news, including announcements of two big deals. European leaders agreed over the weekend to make loans available to Greece to help the country lower its public debt burden.

"This is clearly a positive development that the EU is identifying and dealing with what has really been it's first real challenge," said Alan Gayle, senior investment strategist for RidgeWorth Investments.

Meanwhile, the latest round of corporate dealmaking signalled that business leaders were more confident about a recovery. Mirant agreed to acquire rival power company Reliant Energy for $1.61 billion, while the private equity firm Cerberus Capital Management is buying DynCorp International, a provider of support services to US national security operations, for $1bn.

The reports on Greece and the corporate buyouts raised expectations that the economy was recovering. Hopes of a rebound have been driving the stock market higher for 13 months. The advance since February has been more incremental but the gains have still left major stock indexes at their best levels in about 18 months.

The Dow rose 8.62, or 0.1 per cent, to 11,005.97. The S&P 500 index rose 2.11, or 0.2 per cent, to 1,196.48.

The Nasdaq composite index rose 3.82, or 0.2 percent, to 2,457.87.