US stocks jump on Greece optimism

NEW YORK: US stocks rallied on Monday as investors welcomed encouraging news from European on progress toward staving off a potentially destabilizing default by Athens.

The Dow Jones Industrial Average rose 108.98 points (0.91 percent) to close at 12,043.56.

The broader S&P 500 climbed 11.65 points (0.92 percent) to 1,280.10, while the tech-heavy Nasdaq Composite surged 35.29 points (1.33 percent) to close at 2,688.28.

The gains came amid reports that banks and EU officials were moving closer to a plan where the banks would roll over half the money received from Greek debt into new 30-year bonds, giving Athens some breathing room to resolve its fiscal crisis.

Investors have been closely watching events in Athens, where the parliament is set to vote later this week on an unpopular package of austerity cuts demanded by the EU and the International Monetary Fund.

"Given the upcoming news from Greece and probably some news on the debt conversation in Washington, people are speculating that the outcome is going to be positive on both," said Michael James of Wedbush Morgan Securities.

In Washington, President Barack Obama became directly involved for the first time in talks between Democrats and Republicans on raising the US debt ceiling, which must be resolved to avoid a US government default by August 2.

Financial stocks, which have been battered by fears of fallout from the Greek debt crisis, were among the biggest winners on Monday, with Bank of America gaining 3.1 percent and American Express rising 2.5 percent.

Shares of Microsoft surged 3.7 percent amid rumors that the software giant would release its next version of the Windows operating system earlier than expected, in April 2012.

Investors meanwhile shrugged off Commerce Department data showing that consumer spending in May was virtually unchanged from April, underscoring the continued weakness of the world's largest economy.

Bond prices fell. The yield on the 10-year US Treasury note rose to 2.93 percent from 2.87 percent on Friday, while that on the 30-year bond climbed to 4.28 percent from 4.17 percent.

Bond prices and yields move in opposite directions.

Copyright AFP (Agence France-Presse), 2011