Stocks close higher as Europe nears budget pact

A deal to forge stronger ties among most of Europe's economies sent stocks sharply higher Friday as hopes grew that the region was close to resolving its debt crisis.

The Dow closed up 186.56 points, or 1.6 percent, at 12,184.26. It is up 1.4 percent for the week.

Bank stocks led the market higher, reflecting traders' optimism about Europe's progress toward solving its crisis. Citigroup Inc. rose 3.7 percent, Morgan Stanley 3.2 percent and JPMorgan Chase & Co. 3 percent.

Banks have been weighed down for months by fears about their exposure to Europe. If Europe's crisis spins out of control, U.S. banks that do business with their counterparts there would suffer.

The Standard & Poor's 500 index closed up 20.84 points, or 1.7 percent, at 1,255.19. The Nasdaq composite index finished up 50.47, or 1.9 percent, at 2,646.85. The S&P is up 0.9 percent for the week, the Nasdaq 0.8 percent.

The gains were broad. DuPont was the only stock among the 30 in the Dow average to fall. The chemical and materials company slid 3.2 percent after saying it expects earnings this year will fall well short of Wall Street's forecasts because of weak demand for electronics and industrial supplies.