LITTLE ROCK — Financial markets around the world stormed higher Friday after European leaders produced a breakthrough plan to rescue banks, relieve debt-burdened governments and restore investor confidence.
The Dow closed up 277.83 points, or 2.2 percent, at 12,880.09, its second-biggest gain this year, and stocks advanced even more in Europe, in strong and weak countries alike.
The S&P 500 rose 33.12, or 2.5 percent, to 1,362.16. The index rose 4 percent in June, its best month since February and its strongest June since 1999.
The Nasdaq rose 85.56, or 3 percent, to 2,935.05.
About seven stocks rose for every one that fell on the New York Stock Exchange and consolidated volume was a heavy 4.39 billion shares.
The price of oil posted its biggest one-day increase in more than three years, and other commodities shot higher - signs of hope that a deal in Europe will remove a bigbarrier to a healthier world economy.
In Brussels, leaders of the 17 countries that use the euro appeared to have created a plan to fight a debt crisis that has hounded European governments and world investors for three years.
The leaders agreed to pump money directly into stricken banks, let some countries tap into rescue money without submitting to stringent budget requirements and, later, tie European governments closer in economic union.
David Kelly, chief global strategist at JPMorgan Funds, said it was becoming clear that European leaders will compromise to solve the crisis. One of the biggest stock gains Friday was in Germany, which took a hard line in earlier negotiations.
“The whole language is positive here,” he said. “Every time they’ve stared over the cliff into the abyss of a euro breakup, they’ve realized it’s much wiser to get closer together.”
There was a sign immediately that Europe’s latest plan was working: The cost for the troubled government of Spain to borrow money on the bond market fell dramatically, by more than half a percentage point, to 6.34 percent.
Previous market rallies tied to progress in Europe have proved temporary. But for the day, at least, global stock markets were jubilant:
In New York, the Dow Jones industrial average closed up 277.83 points, only a sliver below its high for the day. The Standard & Poor’s 500 index soared 2.5 percent. The rally left the S&P with a gain of 8.3 percent at the halfway mark for the year.
The benchmark stock index in Germany rose 4.3 percent, by far its best performance this year. Germany has the strongest economy in Europe, and it depends heavily on exports, so it needs other countries to stay healthy.
Stocks hit their highest level in two months in Italy and Spain, two of the countries with the shakiest finances. Stocks also neared a two-month high in Greece, another epicenter of the debt crisis.
Traders sold U.S. Treasurys, sending the yield on the 10-year Treasury note up to 1.65 percent from 1.57 percent late Thursday, as demand decreased for ultra safe investments.
Energy prices rose sharply because a cure for Europe’s debt problem would remove a big drag on global economic growth. The price of oil jumped $7.27 per barrel to$84.96. It was a gain of 9.4 percent, the biggest for oil since March 2009.
Gold gained $54, the biggest jump since June 1, to $1,604 an ounce. Copper and silver rose about 5 percent.
News of the deal in Europe broke overnight, and Friday, stocks soared from the open.
Some market analysts remained cautious. Uri Landesman, president of Platinum Partners LLC, a New York hedge fund, said he expects more sharp leaps and dives this summer as traders speculate about Europe’s future.
“This Europe thing is going to trade up and down based on the news of the day,” Landesman said.
Business, Pages 30 on 06/30/2012