Wall Street rebounds on Bernanke, European shares falls on Italian vote

US stocks ended higher today, rebounding from their worst decline since November, after Federal Reserve Chairman Ben Bernanke defended the Fed's bond-buying stimulus and sales of new homes hit a 4 1-2-year high.

The Dow Jones industrial average shot up 115.96 points, or 0.84 percent, to end at 13,900.13. The Standard & Poor's 500 Index gained 9.10 points, or 0.61 percent, to finish at 1,496.94. The Nasdaq Composite Index advanced 13.40 points, or 0.43 percent, to close at 3,129.65.

Euro zone shares sank to three-month lows today after an Italian election stalemate renewed concerns about the future of the euro zone and sent investors in search of insurance against a deeper sell-off.

Italy's benchmark FTSE MIB index sank 4.9 percent to 15,552.20 points, posting its biggest daily fall in nearly a year and with all but two of its 40 companies in the red.

The EuroSTOXX 50 index closed down 3.1 percent at 2,570.52 points, its lowest finish since Nov. 28. The move extends the euro zone blue chip index's retreat from an 18-month high of 2,754.80 points hit at the end of January.

The broader, pan-European FTSEurofirst 300 fell 1.4 percent to 1,150.25 points.

Japan's Nikkei average tumbled 2.3 percent, its biggest one-day drop in more than a month, as concerns grew that inconclusive elections in Italy could reignite the euro zone debt crisis.

The Nikkei dropped 263.71 points to 11,398.81, retreating from a 53-month high hit on Monday after sources said the Japanese government was likely to nominate Asian Development Bank President Haruhiko Kuroda, an advocate of monetary easing, as its next central bank chief.