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* Trump calls off tariffs as Mexico vows to tighten borders
* U.S. automakers GM, Ford rise
* United Tech, Raytheon to create $121 bln aero-defense giant
* Salesforce.com falls after deal to buy Tableau Software
* Indexes up: Dow 0.68%, S&P 0.92%, Nasdaq 1.75% (Updates prices, adds comments)
By Aparajita Saxena
June 10 (Reuters) - Wall Street's main indexes gained on Monday, after the United States abandoned its plans to impose tariffs on Mexican goods, while a multi-billion dollar deal in the industrial space added to the upbeat sentiment.
Mexico on Friday agreed to step up efforts to stem the flow of illegal Central American migrants, following threats from U.S. President Donald Trump to impose a 5% import tariffs on all Mexican goods starting Monday.
"Both the U.S. economy and the Mexican economy would have been worse off had the tariffs been imposed," said David Kass, professor of finance at the University of Maryland.
"Investors are also optimistic today in the hope that the trade war with China will also be resolved in the near future," Kass said.
The S&P 500 index and the Dow Industrials rose to a one-month high, following their biggest weekly gains on Friday since the end of November. The benchmark index is now just 2% short of its all-time high hit in early May.
U.S. automakers, which have long built vehicles in Mexico, traded higher, with General Motors Co gaining 2.1% and Ford Motor Co 1.3%. Corona beer maker Constellation Brands , which has significant Mexico exposure, rose 2.1%%.
United Technologies Corp agreed to combine its aerospace business with defense contractor Raytheon Co to create a new company worth about $121 billion.
"It is not just about the market, it is the underlying economy which is not likely to weaken if you have these signs of business optimism," said Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee.
Shares of United Technologies, however, fell 1.7%, after Trump said he was a "little concerned" about their merger as it could take away competition in the sector. Raytheon rose 2.2%.
Technology stocks rose 1.7% and provided the biggest boost among the nine major S&P sectors trading higher.
Large-cap companies, including Apple Inc, Microsoft Corp, Amazon.com and JPMorgan Chase, rose between 1.6% and 4.4%.
At 11:39 a.m. ET, the Dow was up 176.68 points, or 0.68%, at 26,160.62, the S&P 500 was up 26.30 points, or 0.92%, at 2,899.64 and the Nasdaq Composite was up 135.47 points, or 1.75%, at 7,877.58.
In another deal, Salesforce.com Inc said it would buy big data firm Tableau Software for $15.3 billion. Salesforce.com shares fell 4.5%, while those of Tableau jumped 34.9%.
Among sectors, only the defensive utilities, consumer staples and real estate were trading lower.
Chemical marker LyondellBasell Industries rose 4.9%, the most among S&P companies, following a 37 million share buyback program on Monday.
Kraft Heinz Co gained 4.6% after the packaged food company said the financial numbers it restated last month were accurate following completion of an internal investigation.
Advancing issues outnumbered decliners by a 2.13-to-1 ratio on the NYSE and a 2.37-to-1 ratio on the Nasdaq.
The S&P index recorded 58 new 52-week highs and no new low, while the Nasdaq recorded 84 new highs and 34 new lows. (Reporting By Aparajita Saxena and Shreyashi Sanyal in Bengaluru; Editing by Anil D'Silva and Arun Koyyur)