US STOCKS-Wall St gains as Ukraine worry cools, M&A lift
* Dollar General offers to buy Family Dollar
* Russia says humanitarian convoy issue resolved, but no ceasefire
* Indexes up: Dow 0.77 pct, S&P 0.68 pct, Nasdaq 0.68 pct (Updates to market open, adds quote)
By Chuck Mikolajczak
NEW YORK, Aug 18 (Reuters) - U.S. stocks advanced on Monday, as the threat of an escalation of tensions in Ukraine appeared to diminish and the latest flurry of merger action supported equities.
Russia said all issues related to its humanitarian convoy to Ukraine had been resolved but said no progress has been made toward a ceasefire or political solution to the fighting in the east of the country after talks between Russia, Germany, France and Ukraine on Sunday.
However, the region remained unsettled as Ukraine accused pro-Russian rebels on Monday of hitting a refugee convoy of buses with rocket fire near the eastern city of Luhansk, but the separatists denied responsibility.
Mergers and acquisitions continue to flourish and provide a lift to equities.
Discount retailer Dollar General Corp offered to buy Family Dollar Stores Inc for $8.95 billion, trumping an offer by Dollar Tree Inc. Family Dollar shares gained 4.3 percent to $79.35 while Dollar General jumped 9.4 percent to $62.87 as the best performer on the S&P 500. The S&P retail index climbed 1.1 percent. Continuación...