U.S. Stocks Open Higher, Lifted By Buffett Offer To Bond Insurers

NEW YORK (MarketWatch) -- U.S. stocks opened higher Tuesday, lifted by billionaire investor Warren Buffett's proposed buyout of bond insurers' liabilities and another round of cost-cutting by auto giant General Motors Corp.

The Dow Jones Industrial Average gained 61.4 points to 12,301.4.

The S&P 500 climbed 7.56 points to 1,346.69, while the Nasdaq Composite rose 13.35 points to 2,333.41.

On the New York Mercantile Exchange, crude fell 51 cents to $93.08 a gallon, while gold declined $3.3 to $923.4.

In a televised interview, Buffett told CNBC Berkshire Hathaway Inc. made the offer to MBIA Inc., Ambac Financial Group Inc. and Financial Guaranty Insurance Co., which is partially owned by Blackstone Group LP . One of the three rejected the offer and the two others have yet to respond to the offer to reinsure $800 billion in municipal bonds, Buffett said. .

"As a potential way out of the bond insurance mess, this buoyed investor optimism and boosted stocks ahead of the opening bell," said analysts at Action Economics.

GM said it is offering buyouts to 74,000 United Auto Workers members in the U.S. to cut costs, and reported losses of $38.7 billion last year, its biggest yearly decline.

Investors were also heartened by reports of a plan by half a dozen U.S. mortgage lenders to help at-risk borrowers keep their homes by freezing foreclosures for 30 days for borrowers more than three months behind on their mortgage payments.

Formal announcement of the plan involving JPMorgan Chase , Citigroup Inc. , Bank of America Corp. , Washington Mutual Inc. , Wells Fargo , and Countrywide Financial Corp. is scheduled for 11:15 am. Eastern.

Overseas, Credit Suisse Group trimmed its projected exposure to subprime mortgage debt, with the Swiss investment bank also reporting fourth-quarter net profit fell 72% due to write-downs. .

Shares of Schering-Plough Corp. gained after the drug maker reported steep fourth-quarter losses, but still beat forecasts. .

By Kate Gibson