Global stock markets rebounded early on Monday as a wave of takeover activity helped investors shake off an obsession with the slumping U.S. housing market. The Dow Jones industrials closed up 115 points.

Concerns about rising mortgage defaults remained prominent, however, as Wall Street braces for the fallout from as many as 1.5 million foreclosures this year and awaits word from the Federal Reserve’s interest-rate setting committee mid-week.

Few economists are predicting a rate cut at this week’s meeting, although 42 of 80 economists polled by Reuters March 9-14 expected a cut by the end of September.

Federal Reserve Chairman Ben Bernanke  has said that the housing woes were well contained, but investors will scrutinize this week’s comments from the Fed for any changes in tone.

"It will be extremely interesting to see what the Fed says on Wednesday and whether it decides to do a surprise rate cut to help offset what is appearing to be a bigger (housing) problem than originally envisioned," said Gary Balter, a Credit Suisse analyst who tracks companies, including Home Depot  Inc., that are heavily exposed to the housing sector.

U.S. Deputy Treasury Secretary Robert Kimmitt said during a visit to Berlin on Monday that America’s economy remained in good shape and the housing market appeared to be stabilizing.