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Stocks jump on European pledge to help banks

NEW YORK — Stocks rose sharply Monday after the leaders of France and Germany promised to strengthen Europe’s banks. The Dow Jones industrial average jumped more than 250 points, led by Bank of America.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said a “comprehensive response” to the debt crisis would be finalized by the end of the month, including a plan to make sure that banks have adequate capital. That reassured investors, even though the leaders provided few specifics.

The Dow jumped 254 points, or 2.3 percent, to 11,356 at 10:15 a.m. Bank of America Corp. rose 4.8 percent, the most of the 30 companies that make up the index. JPMorgan Chase & Co. rose 4.2 percent.

The Standard & Poor’s 500 index rose 31, or 2.7 percent, to 1,187. Oil and gas driller Nabors Industries Ltd. rose 9 percent, the most of any company in the S&P, after oil rose above $85 a barrel. It hit a 12-month low of $75 a barrel last week.

The Nasdaq composite index rose 71, or 2.9 percent, to 2,551.

Netflix Inc. rose 6 percent after the company abandoned its widely panned decision to separate its DVD-by-mail and Internet streaming services. Subscribers will still be able to use both services under one account and one password.

Investors were also relieved that troubled Franco-Belgian bank Dexia was being rescued and partially nationalized. Dexia became the first European bank to need a rescue because of the region’s debt crisis. It owns large amounts of government bonds of indebted countries like Greece and Italy.

In the U.S., bond trading is closed for the Columbus Day holiday.

Yahoo Inc. jumped 3 percent to $15.95 following reports that founder Jerry Yang may organize a buyout of the company with private equity investors.

Alcoa Inc. will become the first major U.S. company to report third-quarter results after the closing bell Tuesday. The aluminum maker’s stock was up 3.9 percent to $10.06 in early trading.