Bristol-Myers Squibb Co (BMY.N) will buy biotechnology company Amylin Pharmaceuticals Inc (AMLN.O) for about $5.3 billion in cash, helping Bristol-Myers extend its portfolio of diabetes treatments with the addition of drugs Byetta and Bydureon. Shares in Amylin traded in Frankfurt (AMLN.F) were up 6.6 percent.

German industrial gas producer Linde AG (LING.DE) said on Sunday it has agreed to pay $4.6 billion for Lincare Holdings Inc (LNCR.O), a Florida-based provider of oxygen and respiratory therapy services to patients in the home.

A U.S. judge on Friday granted Apple Inc's (AAPL.O) request for a pre-trial injunction against the sale of Samsung Electronics Co Ltd's (005930.KS) Galaxy Nexus phone, handing the iPhone maker its second legal victory against Samsung in a week.

European stocks were up around 1 percent in morning trade on Monday, extending Friday's sharp rally as grim euro zone manufacturing data fuelled speculation the European Central Bank will cut interest rates later this week to support the region's economy. .EU

On the macro front, investors awaited the Institute for Supply Management's June manufacturing index, due at 10 a.m. EDT. Economists in a Reuters survey expect a reading of 52.0 versus 53.5 in May. Investors will also keep an eye on May construction spending, also due at 10 a.m. EDT.

U.S. stocks surged on Friday to close out a sour quarter on a high note as investors cheered an agreement by European leaders to stabilize the region's banks, a pact that helped remove some of the uncertainty that has plagued markets.

The Dow Jones industrial average .DJI jumped 277.83 points, or 2.20 percent, to 12,880.09 at the close. The Standard & Poor's 500 Index .SPX rose 33.12 points, or 2.49 percent, to 1,362.16. The Nasdaq Composite Index .IXIC climbed 85.56 points, or 3.00 percent, to 2,935.05.

For the week, the Dow gained 1.9 percent, the S&P 500 rose 2 percent and the Nasdaq advanced 1.5 percent. For the month of June, the Dow rose 3.9 percent, the S&P climbed 4 percent and the Nasdaq added 3.8 percent. But for the second quarter, the Dow fell 2.5 percent, the S&P 500 lost 3.3 percent and the Nasdaq dropped 5.1 percent.

(Reporting by Blaise Robinson; Editing by Catherine Evans)

• A Permanent Economic Emergency