* CIT in private deal that may avoid bankruptcy-source
* Leading economic index shows recession may be near end
* Goldman Sachs raises S&P 500 end-of-year target (Updates to mid-morning)
By Rodrigo Campos
NEW YORK, July 20 (Reuters) - U.S. stocks rose on Monday, but were off session highs, after CIT Group Inc clinched a deal with bondholders that removed some uncertainty from a recovering financial sector.
CIT shares nearly doubled to $1.30 as the small and mid-sized business lender was expected to announce an agreement to obtain $3 billion in emergency financing that would keep it out of bankruptcy, according to a person close to the matter.
Adding to the positive tone, a forward-looking gauge of the overall strength of the U.S. economy rose for the third consecutive month in June, suggesting the end is near for the 19-month-long recession.
Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois, said the market was advancing on relief over the expected deal that would prevent CIT to sink.
The Dow Jones industrial average gained 23.65 points, or 0.27 percent, to 8,767.59. The Standard & Poor's 500 Index added 1.31 points, or 0.14 percent, to 941.69. The Nasdaq Composite Index was up 4.24 points, or 0.22 percent, to 1,890.85.
The broad S&P 500 index has jumped almost 40 percent from 12-year lows in March. The rally stalled in June as investors sought evidence of the economic recovery, but recent data and corporate quarterly results gave the market a fresh lift and stocks closed their best week in four months last Friday.
Despite warning there is still a significant risk of a "double-dip" recession, Goldman Sachs raised its year-end target for the S&P 500 to 1,060 from 940 -- a rise of almost 13 percent from current levels.
In company news, shares of machinery maker Caterpillar Inc advanced 4.5 percent to $35.50 after Bank of America-Merrill Lynch upgraded the stock to "buy," saying the second quarter may mark a bottom for the construction market.
Big companies due to report quarterly scorecards on Monday include Texas Instruments Inc and Legg Mason Inc.