Stocks rise on promise of French and German bank
U.S. Equities have increased significantly as investors took comfort from the promise of French and German leaders on Sunday to take steps to protect European banks from the debt crisis.
Markets were also driven by the rescue of Dexia's problems Franco-Belgian bank.
The main Dow Jones index closed up 330 points, or 3%, to 11,433, although trading volumes were low. Earlier, European markets saw strong gains.
Oil prices also rose sharply, with the U.S. Light, sweet crude and Brent crude up 3.5%.
Light, sweet crude rose $ 2.92 a barrel to $ 85.90, while Brent rose $ 3.61 to $ 109.49. Earlier, Germany's DAX index ended the day up 3%, French CAC 40 and FTSE 100 UK about 2% more.
Investors were also comforted by the fact that France, Belgium and Luxembourg announced a bailout of Dexia, dispelling fears that it might go bankrupt.
The Belgian government said it would buy the division of the bank in Belgium for 4 billion euros (U.S. $ 5.4bn, £ 3.4bn), while the Luxembourg finance, the minister said a Qatar investment group is willing to buy the unity of the bank in Luxembourg.
"For now, markets are moving in the belief that there is forward momentum on the treatment of European banking crisis," said Andrew Busch at BMO Capital Markets.
"For me, this is an exercise in placing sandbags around the financing of global banks to ensure that there are flooded by the water level increasing Greek moratorium," he said.
A New Hope
After talks with French President Nicolas Sarkozy in Berlin on Sunday, German Chancellor Angela Merkel said the two nations were "determined to do everything necessary to ensure ... the recapitalization of banks in Europe."
The leaders said they were close to a comprehensive package to ease the crisis and gave details in a matter of weeks.
Investors have been critical of the time spent by eurozone leaders to reach a comprehensive solution to address the crisis, but now there is hope that prompt action will be taken.
All eyes are on the G20 meeting in Cannes in early November, according to analysts.
Stocks rise on promise of French and German bank
