Stocks rose for a third straight session in New York yesterday as corporate mergers and bargain prices lured investors back to a market that is again inching toward record heights. At the close of trading on Wall Street, the Dow Jones industrial average was up 109.54 points, or by 1 per cent, at 10,909.38. The Standard and Poor's 500 index rose 6.77 to 1,334.52, and the Nasdaq composite rose 45.87 to 2,524.21.

Advancing issues outnumbered decliners by a 7-to-5 margin on the New York Stock Exchange, with 1,747 up, 1,255 down and 562 unchanged.

The NYSE composite index rose 2.42 to 636.94, and the American Stock Exchange composite index fell 2.83 to 778.15.