Stocks rise on hopes for Europe's banks

Stocks rose sharply for a second straight day Wednesday on signs the U.S. economy grew in September and European officials are moving to support the region's struggling banks.

The Dow Jones industrial average rose 131 points, gaining 80 in the last hour of trading.

Analysts attributed the rise to increasing optimism about Europe's efforts to contain its debt crisis and a pair of U.S. reports showing a pickup in hiring and growth in service companies last month.

The Financial Times reported late Tuesday that European officials are exploring a joint effort to support the region's banks. That triggered sharp rises in European markets.

Investors are worried that European banks could suffer deep losses if Greece starts missing debt payments, also known as a default. That could cause the value of Greek bonds held by the banks to drop sharply. If weakened banks pull back from lending to each other, it could cause another freeze in global credit markets, as occurred in late 2008.

The news report, which came out after European markets closed Tuesday, triggered a late rally in U.S. stocks that prevented the Standard & Poor's 500 from closing down 20 percent from its recent peak, reached in April. A fall that far would have met the test of a bear market.

The Dow rose 131.24 points, or 1.21 percent, to close at 10,939.95. The Dow jumped 153 Tuesday after its late-day surge. The Standard & Poor's 500 index rose 20.08, or 1.79 percent, to 1,144.03. The Nasdaq composite jumped 55.69, or 2.32 percent, to 2,460.51.

European bank stocks soared, reflecting increasing optimism that European leaders will succeed in limiting the fallout from Greece's debt problems. Credit Agricole jumped 10 percent, and BNP Paribas gained 9 percent. European markets rose broadly. Germany's DAX jumped 5 percent. Benchmark indexes in France and Italy rose 4 percent.