Wall Street up on profits, US deficit talk progress

US stocks recorded their best day since March after strong corporate results and renewed hope for an agreement in Washington on thorny budget issues boosted investor confidence.

The Dow Jones industrial average was up 202.11 points, or 1.63 percent, at 12,587.27. The Standard & Poor's 500 Index was up 21.27 points, or 1.63 percent, at 1,326.71. The Nasdaq Composite Index was up 61.41 points, or 2.22 percent, at 2,826.52.

European shares rose on Tuesday, with forecast-beating earnings lifting some companies, tech shares gaining after an upbeat statement from IBM and banks recouping some ground lost in the previous session's steep fall.

At the close, the FTSE 100 index was 37.18 points or 0.7 percent higher at 5,789.99, recovering almost half of the sharp falls recorded in the previous session.

The Nikkei stock average fell, moving further away from four-month highs, as banks were sold by European and domestic players on growing frustration with governments' inability to solve debt crises in the United States and Europe. The benchmark Nikkei closed down 0.9 percent at 9,889.72, having breached crucial support at its 200-day moving average of 9,903.