The surge in equities was a welcome change of direction from last week, when Wall Street lost more than 4 percent as markets reacted to rising borrowing costs for European governments and the failure by a Congressional committee in Washington to cut the budget deficit.

On Monday, investors took note that Germany and France have been discussing a deal to fast-track European budget and financial coordination. Analysts said that a deal that does not require renegotiating European Union treaties could reassure markets and bring skeptics on board to support the beleaguered euro.

 “We are seeing slightly better news out of Europe,” said Kate Warne, an investment strategist for Edward Jones. With last week’s oversold conditions, she added, “not surprisingly, there are a lot of attractive opportunities.”

With less than two hours left in the trading session, the Dow Jones industrial average of 30 blue-chip stocks zoomed ahead 2.7 percent. The Standard Poor’s 500-stock index, a wider gauge of market activity, jumped 2.9 percent, and the Nasdaq composite index leaped 3.4 percent.

There were reasons to be guarded about the significance of one day of gains, however strong. Monday’s surge had not pushed any of the major indexes into positive territory for the month or for the year.

It could also be a symptom of rising market volatility. The S.P. 500, for example, has closed up at least 4 percent eight times since the beginning of 2009, as the financial crisis set in, while it has fallen by 4 percent or more 10 times in that period.

Howard Silverblatt, senior index analyst for Standard Poor’s, said a high proportion of the index’s big swings have, in fact, occurred just since 2009: Of 164 times the index has moved by at least 4 percent since 1962, 26 have been in the last three years.

In Europe, stocks closed even higher. The Euro Stoxx 50 index, a barometer of euro zone blue chips, rose more than 5 percent. The CAC 40 in Paris was up 5.5 percent and the DAX, the German index, rose 4.6 percent. The FTSE 100 index in London gained 2.9 percent.

The bond market reflected investors’ growing risk appetite, with the securities usually considered safest falling in price. That meant yields on the United States 10-year Treasury rose 3 basis points to 2.95 percent. The comparable German bond rose 4 basis points to yield 2.29 percent. A basis point is one-hundredth of a percent.

Bonds of countries that have been seen as more risky rose in price. Italian 10-year bonds traded to yield 7.191 percent, down 4 basis points. Spanish 10-years were down 13 basis points at 6.50 percent.

“Talk that European countries were discussing bilateral treaties to strengthen fiscal ties across the current monetary union seems to be easing tensions somewhat this morning, and driving a sizable sell-off in the U.S. rates markets,” wrote Guy LeBas, the chief fixed-income strategist for Janney Montgomery Scott, in a research note.

Rumors of preparations for an International Monetary Fund bailout of Italy — even though quickly denied by the fund — also contributed to a sense that official efforts to stabilize the euro were progressing.

Alessandro Frigerio, a fund manager at R.M.J. Sgr in Milan, said he had been “almost certain” that the market would rally before Dec. 9, when European leaders hold a summit meeting to discuss the sovereign debt crisis.

“The market had been selling off for weeks on all the talk and rumors,” he said. “Now, we’re going to start getting some facts,” including more detail on the European Financial Stability Facility, the primary euro zone bailout vehicle, and Italy’s plans to pay down its debt.

“I don’t know how the market will react after it gets the facts, though,” he said. “We’ll see when we get them.”

Investors seemed to shrug off dire warnings from the Organization for Economic Cooperation and Development and from Moody’s Investors Service, both of which warned that the euro zone problems were well on their way to becoming serious issues for non-euro countries.

They also ignored another dismal debt offering in Italy, where the Treasury needed to pay 7.20 percent to sell 12-year bonds, 2.7 percentage points above what it paid at a similar auction in October.

Earlier in Asia, stocks rose modestly.

Markets also took a measure of optimism from the National Retail Federation, which said Sunday that spending in the United States per shopper over the Thanksgiving weekend surged 9.1 percent over last year — the biggest increase since 2006 — to an average of almost $400 a customer.

On Wall Street, consumer stocks were up about 3 percent, while energy stocks were up more than 3.5 percent as oil prices rose, with Brent crude topping $100 a barrel. The dollar was lower against most other major currencies. The euro rose to $1.3336 from $1.3239 late Friday in New York.

Bettina Wassener contributed from Hong Kong.

Article source: http://www.nytimes.com/2011/11/29/business/global/daily-stock-market-activity.html?partner=rss&emc=rss