US STOCKS-Wall St gains on deal activity, energy shares rally

* Alcoa (NYSE: AA - news) to buy RTI International for $1.5 bln

* Oil rises 2 pct, lifting energy names

* GM (NYSE: GM - news) shares rally; plans massive buyback

* Indexes up: Dow 0.6 pct, S&P 0.3 pct, Nasdaq flat (Updates to midday trading)

By Ryan Vlastelica

NEW YORK, March 9 (Reuters) - U.S. stocks were mostly higher on Monday, boosted by a couple of billion-dollar deals, while a sharp increase in the price of crude oil supported energy names.

The gain comes a session after the S&P 500's biggest drop in almost two months, as well as two straight weeks of declines for major indexes.

The S&P 500 is about 2 percent below its record closing high, as is the Dow. The Nasdaq is 2.4 percent below its record close hit in March 2000.

"We're positive on the stock market here, and the recent setback last week just provides better opportunity to buy," said Tom Mangan, senior vice president at James Investment Research Inc in Xenia, Ohio.

Alcoa Inc said it would buy RTI International Metals (NYSE: RTI - news) Inc for $1.5 billion. Separately, Simon Property Group offered to buy Macerich Co for $22.4 billion.

Alcoa lost 4.9 percent to $13.77 while RTI jumped 40.5 percent to $38.33. Macerich rose 5.9 percent to $91.86 while Simon Property (NYSE: SPG - news) was up 0.5 percent at $181.51.

"You'll see these kinds of deals continue to be announced since money is so cheap right now that you can borrow all you need to make them happen," said Mangan, who helps oversee $6.4 billion. "This will be very good for small-cap stocks, and it also suggests that the market isn't overly expensive overall."

Whiting Petroleum Corp (NYSE: WLL - news) rose 9.6 percent to $37.35. Late Friday, the Wall Street Journal reported that the company was seeking a possible buyer, though a person familiar with the board's thinking told Reuters he was not aware of such a plan.

U.S. crude futures rose 1.9 percent to $50.56 per barrel after market data firm Genscape reported a modest stock build last week at the Cushing, Oklahoma delivery point for oil. The S&P energy sector rose 0.7 percent and was by far the strongest performer among S&P sectors. Chevron Corp rose 1.6 percent to $105.24, supporting the Dow.

General Motors said it plans a new, $5 billion share buyback in an agreement with dissident investors, and put forward more details on capital allocation that promises investors the potential for further cash returns. Shares (Berlin: DI6.BE - news) rose 2.8 percent to $37.57.

At 11:09 a.m. (1510 GMT), the Dow Jones industrial average rose 98.77 points, or 0.55 percent, to 17,955.55, the S&P 500 gained 5.69 points, or 0.27 percent, to 2,076.95 and the Nasdaq Composite added 2.10 points, or 0.04 percent, to 4,929.47.

Advancing issues outnumbered declining ones on the NYSE by 1,698 to 1,198, for a 1.42-to-1 ratio; on the Nasdaq, 1,389 issues rose and 1,171 fell for a 1.19-to-1 ratio.

The benchmark S&P 500 index was posting 6 new 52-week highs and 7 new lows; the Nasdaq Composite was recording 35 new highs and 36 new lows. (Editing by Bernadette Baum and Nick Zieminski)