Wall Street up as banks rally but gains could be brief

US stocks rose from three days of losses, led by banks after news of more favorable capital requirements and optimism over Greece's austerity plan, but investors cautioned against high hopes.

The Dow Jones industrial average gained 108.98 points, or 0.91 percent, to 12,043.56. The Standard & Poor's 500 Index rose 11.65 points, or 0.92 percent, to 1,280.10. The Nasdaq Composite Index added 35.39 points, or 1.33 percent, to 2,688.28.

European shares edged higher in a choppy session, helped by signs of progress on how private bondholders might share the burden of a solution to Greece's debt problem.

The pan-European FTSEurofirst 300 index of top shares provisionally closed up 0.1 percent at 1,074.82, holding above a support level near 1,070 -- a figure it has recently rallied off -- after hitting their lowest level since mid-March on Friday.

The Nikkei stock average dropped one percent, as euro zone debt worries weighed on markets before the parliamentary vote in Greece this week, with investors fretting over fallout from the debt crisis in the banking system. The benchmark Nikkei fell 1.0 percent to 9,578.31, while the broader Topix index shed 0.9 percent to 825.64.