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(Open): Merger prospects and banking results paved the way for a moderate rise in stocks early on Monday.

Citigroup's second quarter results were better than anticipated, and the bank confirmed it will pay $7bn (£4bn) to settle charges it misled investors.

Two mergers are on the cards in the pharmaceutical sector.

In morning trading the Dow Jones was 7.4% higher at 17,069. The S&P 500 was 0.5% higher at 1,977 and the Nasdaq was at 4,438, also 0.5% higher.

Pharmaceuticals manufacturer, Mylan saw its shares rise 2.45% after it announced it was buying part of the generic-drugs division of Abbott Laboratories' in a deal worth $5.3bn (£3bn). Abbott's shares rose 0.25% in New York.

And Abbvie is engaged in detailed talks to buy London listed Shire. But Abbvie saw its shares fall 1%.

The Citigroup settlement stems from the sale of securities made up of sub-prime mortgages, which were at the centre of the 2008 financial crisis. The bank's shares were up 3.6%.

Citigroup is the second major bank to pay a settlement since an investigation into the loans.