NEW YORK - (AP) - Stocks are having their longest rally since early July. A $19 billion corporate buying spree and encouragingeconomic news form Japan sent the Dow Jones industrial average up213 points and erased its losses from last week.

The return of what's called "Merger Monday" on Wall Streetmade investors more optimistic about the future. So did a reportthat Japan's economy shrank less than feared following the March 11earthquake and tsunami. That helped temporarily ease worries thatthe U.S. economy may slide into another recession.

The Dow rose 213.88 points, or 1.9 percent to 11,482.90. It hasgained 762.96 points since Thursday. That's the best three-daypoint gain since it rose 927.18 in November 2008, during the depthsof the financial crisis. The Dow is also up 7.1 percent over thethree days, the biggest percentage gain since it rose 9.5 percentthe first three days of the bull market in March 2009.

The Standard & Poor's 500 index rose 25.68, or 2.2 percent, to1,204.49. The Nasdaq composite index rose 47.22, or 1.9 percent, to2,555.20.

Markets may have stabilized the last three days, but financialanalysts warned investors not to assume that stocks have fullysettled down after last week's swings. The Dow rose or fell by atleast 400 points in four straight days for the first time ever. Thefirst-ever downgrade of the U.S. credit rating triggered thevolatility. It was worsened by concerns that Europe's debt problemsare worsening and that the U.S. economy is weakening.

"You might have these moments of quiet, but the debt crisis inEurope did not go away," said John Hailer, chief executive for theU.S. and Asia of Natixis Global Asset Management. "Our issues withthe debt, with what our tax policy is going to be going forward,our unemployment did not go away."

"We are probably going to have to look at some very differentlevels of volatility than what a lot of investors grew up with overthe last 25 to 30 years," he said.

A period of relative stability has been common in past volatilemarkets. In 2008, stocks plunged between mid-September andmid-November. From mid-November until the beginning of January2009, the Dow was in a lull of sorts. It ratcheted up and down,mostly in the high 8,000 range. But in early January 2009, it beganto plunge before finally hitting a bottom of 6,547 on March 9.

More swings could come this week. Leaders of France and Germanymeet Tuesday to discuss Europe's debt problems. Spain and othercountries have borrowed so much that they may need help to repaytheir bills. Investors on Tuesday will get an update on how Spain'seconomy did during the second quarter.

Dow finishes wild week on an up noteDow soars 423 points on economic news