Wall Street recovers late from euro zone gloom

US stocks rose on Monday, bouncing back in late trading, as hopes that Italy could get financial support from China tempered investors' worst fears over the euro zone's sovereign debt crisis.

Traders started the day braced for a possible downgrade of France's top banks by Moody's rating agency, but sentiment improved as various European officials succeeded in tamping down fears that political and financial leaders were losing control of the situation.

The Dow Jones industrial average finished up 68.99 points, or 0.63 percent, at 11,061.12. The Standard & Poor's 500 Index was up 8.04 points, or 0.70 percent, at 1,162.27. The Nasdaq Composite Index ended 27.10 points higher, or 1.10 percent, at 2,495.09.

Fears of a Greek default that could spark a global market contagion dragged down stocks, knocking European equities to two-year lows and sending the euro to a seven-month low against the dollar.

Concerns that Moody's Investors Service might downgrade the credit-worthiness of French banks, which are widely exposed to Greek bonds, and the lack of a solution to Greece's months-old debt crisis rattled investor confidence.

The pan-European FTSEurofirst 300 index of top shares fell 2.7 percent to close at 890.98, after earlier slumping to 883.04, its lowest level since July 2009. The index has lost more than 20 percent in 2011.

The Nikkei average skidded more than 2% to a fresh two and a half year closing low on concerns that Europe's sovereign debt woes and falls in US share prices will deepen. The benchmark Nikkei fell 2.3 percent to 8,535.67, its lowest close since 8,493.77 marked on April 28, 2009. The broader Topix index shed 1.9 percent to 741.26.