US stocks rise on hopes of EU bank plan

WASHINGTON: US stocks surged for a second day on Wednesday on signs that Europe was preparing a plan to contain the Greek crisis and protect the region's banks from the effects of a Greek debt default.

The Dow Jones Industrial Average closed up 131.24 points (1.21 percent) to 10,939.95.

The broader S&P 500 added 20.08 points (1.79 percent) to 1,144.03, while the tech-heavy Nasdaq Composite rose 55.69 points (2.32 percent) to 2,460.51.

The surge came after Europe's main markets added from three percent to nearly five percent on expectations that EU leaders were close to agreement on how to deal with the eurozone sovereign debt crisis.

Stocks also got a mild boost from economic data that, while not demonstrating a strong economy, argued against the idea of a second recession.

The ISM index on the service economy in September fell slightly to 53 from 53.3 the previous month, still in positive growth territory, and its business activity sub-index rose 1.5 points to 57.1.

Meanwhile the private payrolls firm ADP reported that US companies added 91,000 jobs last month, figures that while meagre were better than expected.

Yahoo shares surged 10.1 percent to US$15.92 on Wednesday driven by speculation that Microsoft would lodge a new bid for the web giant, more than three years after being rejected.

"Don't forget that Microsoft has already made an offer, so it is logical, but it is still a rumour," said a market source, insisting on anonymity.

"What is not a rumour is that the head of (Chinese search firm) Alibaba has said he is interested in the company and that Yahoo is prepared to open its books for interested parties," the source said.

Microsoft shares traded 2.3 percent higher at US$25.91.

Walt Disney Co. led gainers in the Dow blue chips, rising 5.5 percent on a Citigroup "buy" recommendation and amid hints it could be a suitor for Yahoo, which tied up earlier this week with Disney unit ABC television.

Blackberry maker Research in Motion jumped 12.4 percent on rumours it might be the target of a takeover as well.

Google recovered from an early plunge after a broker downgrade and ended the day up 0.56 percent. -- AFP