US stocks have jumped about two per cent after three struggling eurozone governments moved ahead on crucial austerity programs, and Europe markets closed sharply higher, boosting confidence that the region was on the right track.
In closing trade, the Dow Jones Industrial Average was up 259.36 points (2.18 per cent) at 12,153.15.
The broad-based S&P 500 added 24.14 (1.95 per cent) to 1,263.83, while the tech-heavy Nasdaq Composite surged 53.60 (2.04 per cent) to 2,678.75.
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Volume was low due to a public holiday for Veterans Day, which also saw bond markets closed.
"Stocks spent the session basking in the black today, as Wall Street applauded encouraging signs from across the pond and solid sentiment and earnings data," said Andrea Kramer at Schaeffer's Investment Research.
"In Europe, Italy's Senate approved a round of economic reforms, and investors are expecting a weekend passage from the lower chamber to trigger Prime Minister Silvio Berlusconi's resignation."
A boost to confidence also came when Greece's new unity government was sworn in to ratify the crucial EU bailout, and in Portugal, lawmakers gave preliminary approval to the government's 2012 austerity budget.
An across-the-board rise in the 30 Dow blue chips was led by a 6.0 per cent gain for Disney, which reported late Thursday a 30 per cent rise in fourth quarter net income, on a 7.0 per cent gain in revenue.
Caterpillar added 4.3 per cent after announcing some $740 million in investments to expand production in the United States and Indonesia.
The bond market was closed.
Yields late on Thursday stood at 2.06 per cent for the 10-year Treasury, while the 30-year Treasury was at 3.11 per cent.
EUROPE STOCKS SHARPLY HIGHER
European stock markets closed sharply higher on Friday in a bounce after recent heavy losses.
Dealers said the gains reflected investor relief that finally Italy and Greece were coming through on the measures demanded of them to ease the eurozone debt crisis.
At the same time, strong doubts remained whether Italy and Greece can ultimately pay down or reduce their debt mountains without more turmoil in the eurozone where growth appears to have come to a virtual halt.
The European Commission warned on Thursday that the EU economy could fall back into recession early next year due to a "vicious circle" of government debt, vulnerable banks and weak spending.
In the absence of growth, it will prove virtually impossible to reduce the debt driving the current crisis, meaning governments will have no choice but to cut spending and hike taxes further, a toxic mix for the economic outlook.
