US STOCKS-Wall St gains on M&A activity, homebuilder data
* Dollar General offers to buy Family Dollar
* Homebuilders' stocks rise after upbeat economic data
* Russia: Humanitarian convoy issue resolved, but no cease-fire
* Dow up 1 pct; S&P 500 up 0.8 pct; Nasdaq up 0.9 pct (Updates to mid-afternoon)
By Akane Otani
NEW YORK, Aug 18 (Reuters) - U.S. stocks surged on Monday, with the Dow up roughly 1 percent and the Nasdaq at a 14-year high as increasing homebuilder confidence and hopes for receding tensions between Russia and Ukraine brightened investors' view of the outlook for equities.
All three indexes extended gains from last week. The tech-heavy Nasdaq, up around 0.9 percent, had climbed above the key 4,500 mark, a level it has not seen since April 2000, and the S&P 500 was back to within 1 percent of an all-time high in early afternoon trading.
Homebuilders' stocks rose after the NAHB/Wells Fargo Housing Market index showed that homebuilder sentiment rose for the third straight month in August.
The PHLX housing sector index climbed 1.4 percent, lifted by a rally in major homebuilders, including PulteGroup Inc, up 2.2 percent at $18.67, and D.R. Horton Inc , up 0.9 percent at $21.02. Continuación...