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Good news on European banks sends stocks higher

Investors bought stocks again Friday on the latest reassuring news about the economy. This time it was about European banks.

European regulators, who issued the results of what are called "stress tests" on the banks, said Friday that only a handful would struggle if the continent's economy weakens. That helped send the Dow Jones industrial average up more than 100 points, which gave the index a two-day gain of more than 300.

The latest second-quarter earnings reports also convinced investors that the economic recovery is proceeding. So did announcements that General Electric Co. is raising its dividend and reports that French drugmaker Sanofi-Aventis is interested in buying Genzyme Corp.

Investors were initially cautious about the stress tests, which measure how well banks would fare if government debt problems and the region's economy worsened. The tests showed that just seven of 91 European banks tested would fail. Some analysts were skeptical, because there was little known about the criteria used to test the banks.

The Dow closed up 102.32, or 1 percent, at 10,424.62. The Standard & Poor's 500 index rose 8.99, or 0.8 percent, to 1,102.66, while the Nasdaq composite index rose 23.58, or 1.1 percent, to 2,269.47.- AP

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