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Stocks rise on relief that Rita wasn't worse But doubts persist as to whether the rally will last

Stocks rose in a relief rally early today as hurricane damage to Gulf Coast refineries appeared to be less than feared and oil prices declined.

Reports that Hurricane Rita narrowly missed key petroleum facilities sent oil and gas prices lower.

Wall Street's advance extends a brief recovery from the end of last week, when Rita weakened and calmed fears it would bring a new round of devastation after Hurricane Katrina battered the Gulf Coast late last month.

"The worst-case scenario with Rita that had been assumed did not occur," said Barry Hyman, equity strategist at Ehrenkrantz King Nussbaum Inc. in New York. "But I look at this as nothing more than a reflex rally. I don't look at it as one that is going to push the market significantly higher."

At 1 p.m., the Dow Jones industrial average gained 55.96, or 0.54 percent, to 10,475.55.

Broader stock indicators were also higher. The Standard & Poor's 500 index rose 3.94, or 0.32 percent, to 1,219.23, and the Nasdaq composite index advanced 9.48, or 0.45 percent, to 2,126.32.

In corporate news, Boeing Co. landed a tentative labor agreement with its mechanics, who walked off the job three weeks ago. Union leaders have urged its 18,400 members to approve the deal, which increases pension payouts, continues retiree medical benefits and carries an 8 percent signing bonus but no wage raise. Boeing added $2.37 to $65.57.

Meanwhile, drugstore chain Walgreen Co. reported its quarterly profit rose about 1 percent after costs from Katrina. Excluding charges, Walgreen's earnings of 35 cents per share still missed Wall Street estimates by 2 cents. The company added 32 of its stores in the New Orleans region remain closed. Walgreen dropped $1.26 to $41.25.

Shares of Delphi Corp. plunged on renewed bankruptcy concerns from Deutsche Bank analyst Rod Lache, who raised doubts that the auto-parts supplier will be able to negotiate terms with former parent General Motors Corp. and the United Auto Workers union. The company on Friday warned of plant closings and layoffs if it cannot secure more cash. Delphi slumped 46 cents to $3.

Shipping firm FedEx Corp. said income for the current period may also be hurt by Katrina while service to New Orleans continues to be disrupted. FedEx, however, did not estimate the hurricane's impact in its quarterly report filed late Friday. FedEx rose 71 cents to $83.81.

Advanced Micro Devices gained $1.13 to $24.11. Shares of the world's second-largest maker of chips that run personal computers may rise to as much as $50 within two years after a spinoff of its flash-memory unit is completed, Barron's reported.

Palm Inc. climbed $1.39 to $30.07. The company said it may release a new Treo smartphone powered by Microsoft Corp. software, the first alliance between the two rivals in the handheld-computer market.

Paychex Inc., the payroll services company founded by Buffalo Sabres owner Thomas Golisano, was up $1.52 at $34.50. The stock was raised to "buy" from "hold" by analyst Brandt Sakakeeny at Deutsche Bank.

Advancing issues outpaced decliners by about 2 to 1 on the New York Stock Exchange, where volume of 645.9 million shares just topped the 642.9 million shares traded at the same point Friday.

The Russell 2000 index of smaller companies climbed 6.51, or 0.99 percent, to 661.97.

Overseas, Japan's Nikkei stock average gained 1.77 percent percent. In afternoon trading, Britain's FTSE 100 added 0.73 percent, Germany's DAX index surged 2.37 percent, and France's CAC-40 was higher by 2 percent.

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