* US Oct factory activity slows less than expected
* Visa drops after offer to buy Visa Europe, top drag on Dow
* Dyax soars after Shire offers to buy company
* Indexes up: Dow 0.55 pct, S&P 0.70 pct, Nasdaq 0.96 pct (Updates to early afternoon)
By Abhiram Nandakumar
Nov 2 (Reuters) - Wall Street was higher on Monday as data showed factory activity was beginning to stabilize in key countries and health care stocks rallied.
U.S. factory activity slowed in October but came in ahead of expectations, while two reports showed manufacturing in China shrank but at a slower pace.
In Europe, German manufacturing activity expanded, albeit at a slower clip.
"The global economy is on track for growth," said Ed Hyland, global investment specialist at J.P. Morgan Private Bank, adding that any fears about a recession, particularly in developed markets, were fading.
As the U.S. earnings seasons begins to wind down, investors' focus turns to economic data, including Friday's crucial monthly jobs report, for a clearer picture of the state of the economy leading up to the Federal Reserve's meeting in December.
Eight of the 10 major S&P sectors were higher, with the health care sector's nearly 2 percent rise leading the advancers. Pfizer was up 3.5 percent and Abbvie 6 percent, providing the biggest boost to the index.
Valeant was up 6.2 percent at $99.63 after short-seller Citron Research said it would not be releasing new allegations against the Canadian drugmaker.
At 12:26 a.m. ET (1526 GMT), the Dow Jones industrial average was up 97.27 points, or 0.55 percent, at 17,760.81. The S&P 500 was up 14.49 points, or 0.7 percent, at 2,093.85 and the Nasdaq Composite index was up 48.47 points, or 0.96 percent, at 5,102.22.
U.S. stocks ended October on Friday with their strongest monthly performance in four years, driven partly by largely positive earnings reports.
"We're seeing new money being allocated to equities after October's very strong performance," said Adam Sarhan, chief executive of Sarhan Capital in New York.
Visa was down about 3.1 percent at $75.17 after offering to buy Visa Europe for as much as $23.34 billion. Visa also reported a lower-than-expected quarterly profit. The stock was the biggest drag on the Dow and the S&P 500.
Hewlett-Packard started trading after its split. HP Inc jumped 12.4 percent to $13.76, while Hewlett Packard Enterprise was nearly flat at $14.75.
Dyax soared nearly 30 percent to $35.69 after British drugmaker Shire said it would buy the company for about $5.9 billion.
TreeHouse fell 5.7 percent to $80.77 after agreeing to buy ConAgra Foods' private label business for about $2.7 billion. ConAgra rose 1.1 percent to $40.98.
Chipotle Mexican Grill was down 2.6 percent at $623.16 after closing all its restaurants in Seattle and Portland due to a reported outbreak of E.coli bacteria.
Advancing issues outnumbered decliners on the NYSE by 2,180 to 786. On the Nasdaq, 1,980 issues rose and 756 fell.
The S&P 500 index showed 17 new 52-week highs and four new lows, while the Nasdaq recorded 46 new highs and 36 new lows. (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza)