Stocks rose Monday following AIG's biggest asset sale since being rescued by the government and reports of a bailout for Greece.

The Dow Jones industrial average rose 60 points in late afternoon trading. The Nasdaq composite index led major indexes after a Japanese drugmaker said it hoped to acquire OSI Pharmaceuticals Inc. and SanDisk Corp. raised its revenue forecast.

American International Group Inc.'s agreement to sell its prized Asian life insurance business to Britain's Prudential PLC for $35.5 billion was the biggest of a handful of deals. AIG wants to sell the division, known as AIA Group, as part of its plan to streamline operations and repay the government. AIG had taken $129.3 billion in government aid by the end of last year.

Overseas markets jumped on hope that European nations will announce a bailout deal to help Greece with its mounting debt problems. Stocks around the world have been hurt in recent months because of concerns debt problems in Greece would spread to other countries and undermine Europe's shared currency, the euro.

European Union and Greek officials are meeting and media reports said a deal could be hammered out soon that would involve state-owned banks in Europe buying Greek government bonds.

The corporate takeovers and the possibility of some fix for Greece's problems bolstered a sense that the economy is recovering. Major stock market indexes rose more than 2 percent in February and have jumped in the past 12 months but investors have still been concerned that a rebound in the economy will stall.

Dave Hinnenkamp, chief executive KDV Wealth Management in Minneapolis, said the deals signal that companies are becoming more confident in the economic recovery and willing to spend some of their cash.

"They are at a point now where they can see that the light at the end of the tunnel isn't a train," Hinnenkamp said.

In the final hour of trading, the Dow rose 59.78, or 0.6 percent, to 10,385.04. The Standard & Poor's 500 index rose 8.67, or 0.8 percent, to 1,113.16. The Nasdaq rose 29.20, or 1.3 percent, to 2,267.46 and erased its loss for 2010.

The Russell 2000 index of smaller companies rose 10.82, or 1.7 percent, to 639.38.

Bond prices rose, pushing down yields. The yield on the benchmark 10-year Treasury note fell to 3.61 percent from 3.62 percent late Friday.

The dollar rose against other major currencies, while gold fell.

Crude oil fell 96 cents to settle at $78.70 per barrel on the New York Mercantile Exchange.

In stocks, AIG rose $1.46, or 5.9 percent, to $26.23. AIG reported disappointing fourth-quarter results Friday, which tempered gains in the market on the final day of trading for February.

OSI Pharmaceuticals jumped $18.75, or 50.7 percent, to $55.77 after Astellas Pharma Inc. said it would take a $3.5 billion takeover bid to OSI shareholders after management rejected the offer.

SanDisk increased its first-quarter revenue forecast. Shares of the maker of flash memory cards rose $3.42, or 11.7 percent, to $32.57.

Millipore Corp. jumped $10.50, or 11.1 percent, to $104.91 after Germany's Merck KGaA said Sunday it would pay $6 billion to acquire the maker of biotechnology equipment.

MSCI Inc. struck a deal to acquire RiskMetrics Group Inc. for about $1.55 billion in cash and stock. The companies sell services to financial companies. MSCI fell $1.20, or 4 percent, to $28.77, while RiskMetrics rose $2.50, or 13.4 percent, to $21.13.

Manny Weintraub, president of Integre Advisors in New York, said investors are still trying to determine what an economic recovery will look like. In past downturns, the rebound is often more swift than investors expect. But economic reports in the past two months have signaled a more tepid recovery.

Still, Weintraub sees the buyouts as a good sign that solid companies can obtain financing a year after stocks tumbled to 12-year lows.

"It's definitely a show of confidence," he said.

The Commerce Department said personal spending rose 0.5 percent in January. Economists had forecast an increase of 0.4 percent. Investors saw the gain in spending as a welcome sign for the economy. However, personal income edged up 0.1 percent, below the 0.4 percent forecast by economists. It was the slowest growth in income in fourth months and could eventually hurt spending.

The spending figures lifted retailers. Macy's Inc. rose 65 cents, or 3.4 percent, $19.80, while Saks Inc. rose 21 cents, or 3 percent, to $7.19. Tiffany & Co. rose $1.14, or 2.6 percent, to $45.53.

Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 554.9 million shares traded with 547.6 million traded at the same point Friday.

Britain's FTSE 100 gained 1 percent, Germany's DAX index jumped 2.1 percent, and France's CAC-40 climbed 1.6 percent. Japan's Nikkei stock average rose 0.5 percent.