US Markets

U.S. blue-chip stocks drove higher Wednesday, pushing the Dow Jones Industrial Average into positive territory for 2011 as investors grew optimistic about plans to recapitalize euro-zone banks. The Dow Jones Industrial Average gained 192 points, or 1.7%, to 11609 in afternoon trading, while the Standard & Poor's 500-stock index climbed 22 points, or 1.9%, to 1218 and the Nasdaq Composite advanced 41 points, or 1.6%, to 2624.

With the gains, the Dow is now up 6.4% this month the fifth-best start to October since 1900 and is up 0.3% from where it started the year. Even so, many market watchers argue that the markets remain locked in the same trading range that began two months ago, bouncing between Dow levels of about 10700 and 11700 as investors react to headlines from the European debt crisis and fears of a recession in the U.S. and overseas. Wednesday's gains were led by bank stocks, following gains by their European counterparts.

J.P. Morgan Chase surged 4.6%, Bank of America gained 5.1% and Citigroup jumped 6.9%. Industrial stocks were also strong. Caterpillar added 2.5% and 3M gained 3.8%. The broad gains in stocks, which pushed all 10 sectors of the S&P 500 into positive territory, overshadowed a shaky start to the third-quarter earnings reporting season. Alcoa was one of the few decliners among the Dow components, falling 0.5% after the blue-chip aluminum producer unofficially kicked off the third-quarter reporting season by reporting lower than expected earnings. Revenues were higher than expected.

EU Stocks

European stock markets rose Wednesday, with financial shares leading the gains, on rising expectations that policy makers can work out a viable plan to stem the euro-zone debt crisis much sooner than previously thought. The benchmark Stoxx Europe 600 index ended 1.6% higher at 239.16. Among regional indexes, the U.K.'s FTSE 100 index rose 0.8% at 5441.80, while France's CAC-40 index closed 2.4% higher at 3229.76 and Germany's DAX index closed up 2.2% at 5994.47. Despite Slovakia's parliament rejecting expansion of the European Financial Stability Facility late Tuesday, European investors were comforted by news that lawmakers in the country are now regrouping in an effort to hold a vote before the end of the week that will approve the EFSF's expansion.

The mood was further lifted by the European Commission calling on the region's governments to release a sixth slice of emergency lending to Greece and move up the launch of the euro zone's permanent rescue fund by one year. The commission, the EU's executive arm, said the European Stability Mechanism should be up and running in July 2012 instead of mid-2013 as previously planned. Importantly, the EC said the EFSF should be available to lend money to governments to recapitalize their banks as a last resort.

The comments helped European stock markets extend session gains, with traders comforted by the idea that progress by EU leaders is finally being made. The banking sector posted hefty gains on these plans but, more specifically, it was helped by the EC backing steps to reinforce European banks. The EC said institutions that need capital should raise it from financial markets if possible and national governments should be ready to provide capital if banks can't raise it from private sources. The Stoxx Europe 600 banks index ended 2.9% higher at 143.71.

In Paris, shares of BNP Paribas rose 5.7% after Societe Generale upgraded the stock to buy from hold. Greek lenders also rallied after tumbling over the past couple of sessions following the decision Monday by Greek authorities to take control of Proton Bank. Shares in Alpha Bank jumped 18% Wednesday, leading the Stoxx 600 index. The Greek ASE Composite rose 4.8% to 759.89.

Also helping to underpin the positive tone in Europe were better than expected euro-zone data. Industrial production in August rose 1.2% from July, and 5.3% from the previous year, compared with expectations of a 0.8% fall compared with a month earlier and a 2.1% rise on the year. Among other strong performers in Europe, shares in ASML Holding rose 6.3% in Amsterdam after the chip-equipment maker reported a 32% increase in third-quarter profit. In Germany, the market was led by gains for car makers. Shares in Daimler jumped 5.6% while BMW rose 2.2%.

Asia-Pacific Markets

Major Asian equity markets finished off lows Wednesday, as gains for Chinese banks worked to offset losses connected to weak results from U.S. aluminum giant Alcoa and a snag for Europe's bailout-fund expansion. Hong Kong's Hang Seng Index rose 1% to close at 18329.46 after dropping as low as 1.9%, while the Shanghai Composite index surged 3% to 2420.00, South Korea's Kospi advanced 0.8% to 1809.50 and India's Sensex rose 2.6% to 16958.39. Japan's Nikkei Stock Average closed at 8738.90, down 0.4%.

Asian stock markets were sitting on weekly gains after France and Germany recently pledged to support the European banking sector and China's sovereign-wealth fund bought up shares in selected banks. However, a stumbling block emerged in the path toward resolving Europe's debt woes late Tuesday, after the Slovakian parliament rejected a plan to expand the area's EUR440 billion bailout fund. In the banking sector, Nomura Holdings Inc. declined 1.4% in Japan.

However, after a shaky start, many Chinese banks swung to gains in Hong Kong, with Agricultural Bank of China Ltd. up 2.3%, and Bank of China Ltd. trading 1.5% higher. The gains came a day after Central Huijin Investment Ltd., the domestic investment arm of China's sovereign-wealth fund bought shares of those banks and others. Chinese airlines were also higher, with Air China Ltd. up 2.8% and China Eastern Airlines Corp. up 5.7% in Hong Kong after Morgan Stanley upgraded the sector to attractive, citing more reasonable valuations. Resource-sector firms were weak Wednesday, with Sumitomo Metal Mining Co. down 1.4% in Tokyo.

Commodities

Base metals closed firmly higher on the London Metal Exchange Wednesday, boosted by expectations of a plan to recapitalize Europe's ailing banks. LME three-month copper ended PM kerb trading at $7,525 a metric ton, up 3.2% from Tuesday's afternoon close, while three month lead ended 4.3% higher at $2,070/ton. Crude-oil futures broke their five-session streak of gains Wednesday, settling slightly lower on mild trading.

The market has spent two days now trading around $85 a barrel, after weeks of extraordinary volatility that saw both a one month high and a one-year low. With crude oil climbing more than $10 a barrel, or 13%, over the last week, analysts said the market was absorbing its gains before deciding on its next direction.

Light, sweet crude oil for November delivery settled down 24 cents, or 0.3%, at $85.57 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE Futures Europe exchange was up 63 cents, or 0.6%, at $111.36 a barrel. Gold prices cemented their gains after European officials unveiled a plan for recapitalizing the region's banks, soothing fears about the spread of sovereign debt problems.

The most actively traded contract, for December delivery, settled $21.60, or 1.3%, higher at $1,682.60 a troy ounce on the Comex division of the New York Mercantile Exchange. October-delivery gold rose $21.60, or 1.3%, to settle at $1,681.30 a troy ounce.