Global stocks, euro rally on debt crisis optimism

Global equities and the euro rallied on Friday as investors bet that European leaders in crucial meetings over the next few days will move forward in resolving the euro zone's two-year-old debt crisis.

The S&P 500 posted its third straight week of gains, lifted by optimism before this weekend's summit of European leaders and strong earnings from blue-chip stocks.

US stocks rose in a broad rally to their highest levels since early August after a volatile week.

The Dow Jones industrial average closed up 267.01 points, or 2.31 percent, at 11,808.79. The Standard & Poor's 500 Index climbed 22.86 points, or 1.88 percent, at 1,238.25. The Nasdaq Composite Index added 38.84 points, or 1.49 percent, at 2,637.46.

Still, senior European sources said Berlin and Paris were still at loggerheads on two core elements of a plan to build a firewall around Greece and stabilize bond markets: how to scale up the euro zone's rescue fund, the European Financial Stability Facility (EFSF), and how to reduce Greek debt.

Major regional stock gauges in Europe and for the world rose more than 2 percent while US stock indices moved up by almost the same.

The FTSEurofirst 300 index of top European shares provisionally closed 2.5 percent higher at 977.72 points, the index's biggest one-day rise in two weeks, though volumes were relatively thin. The index eked out a gain of 0.2 percent on the week, adding to three weeks of brisk gains.