* Caterpillar, EMC both in multibillion-dollar deals
* Amazon's stock off about 2 pct, limits Nasdaq's gain
* Dow up 0.7 pct, S&P up 0.6 pct, Nasdaq up 0.5 pct (Updates to afternoon, changes byline)
By Leah Schnurr
NEW YORK, Nov 15 (Reuters) - Wall Street stocks climbed on Monday after two large proposed acquisitions and strong retail sales boosted investors' confidence about the outlook for stocks.
Caterpillar Inc agreed to buy mining equipment maker Bucyrus International Inc for $7.6 billion, driving the shares of both companies higher and buoying the materials and industrials sectors.
Bucyrus surged 28.9 percent to $89.76, while Dow component Caterpillar rose 2.7 percent to $83.24.
"It really reemphasizes the attractiveness and growth potential in the basic materials sector," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
Hellwig said he expects M&A deals down the line will also focus on strategic pairings with companies in similar business lines that see the buyer gain access to international markets.
Data storage equipment maker EMC Corp agreed to buy smaller rival Isilon Systems Inc for $2.25 billion. Isilon was among the most active stocks on Nasdaq, jumping 28.5 percent to $33.77, while EMC slipped 0.6 percent to $21.58.
The market's gains came after Friday's steep selloff that ended a five-week string of gains. The M&A announcements helped offset weak New York manufacturing data and lingering European sovereign debt woes.
The Dow Jones industrial average gained 77.58 points, or 0.69 percent, to 11,270.16. The Standard & Poor's 500 Index rose 7.00 points, or 0.58 percent, to 1,206.21. The Nasdaq Composite Index added 11.90 points, or 0.47 percent, to 2,530.11.
The S&P 500 dipped below its 20-day moving average on Friday for the first time since Sept. 1, but managed to close above it in a sign the level, measured just above 1,194, could provide strong technical support.
Among other gainers in the mining sector, Terex Corp climbed 4.9 percent to $25.61 and Joy Global Inc shot up 9.2 percent at $79.
"The valuation multiple that Caterpillar is willing to pay for Bucyrus makes Joy worth potentially more than it's currently trading," said Robert Stimpson, portfolio manager at Oak Associates in Akron, Ohio.
On the data front, retail sales posted their largest gain in seven months, lifted by purchases of motor vehicles and building materials. Separately, a gauge of manufacturing in New York state fell in November to its lowest level since April 2009.
Capping gains on the Nasdaq, Amazon.com Inc shares fell 2.3 percent to $161.84 on concerns that the decision by a number of rivals, including Wal-Mart, to offer free shipping could challenge the online retailer's results.
Charts show Amazon's stock is technically weak in the short term, with the daily moving average convergence-divergence at a 'sell' since late October, except for a one-day blip last week. Momentum turned negative on Friday when it also accumulated a two-day drop of 4.4 percent.
And after Amazon's close on Friday below its 20-day moving average -- a first for the share since Oct. 11-- the Bollinger bands chart shows a near-term target of $158.65, more than 4 percent below Friday's close. (Additional reporting by Rodrigo Campos and Edward Krudy; Editing by Kenneth Barry)