Euro zone hope revives Wall Street optimism

US stocks rose on Monday as sentiment swung toward hope European officials would find a way to cut Greece's debt and shore up European banks.

Shares rallied to session highs in the afternoon after a report said a plan to leverage money from the European Financial Stability Facility was in the works.

The Dow Jones industrial average ended up 272.38 points, or 2.53 percent, at 11,043.86. The Standard & Poor's 500 Index was up 26.52 points, or 2.33 percent, at 1,162.95. The Nasdaq Composite Index was up 33.46 points, or 1.35 percent, at 2,516.69.

Banks and insurers led European shares higher as expectations for fresh political and central bank action to stem contagion from any Greek default gave a shot in the arm to both sectors, even as recession fears continued to hit miners.

The FTSEurofirst 300 added 1.8 percent to end at 897.58 points, following a 0.8 percent gain on Friday. The index remains down 20 percent year-to-date, however.

Japan's Nikkei share average slid to its lowest close since April 2009 today as it caught up with Wall Street losses after a three-day weekend, falling in line with other risk assets on worries about a Greek debt default.

The Nikkei lost 2.2 percent to 8,374.13, its lowest close since 8,351.91 hit on April 1, 2009.