- Associated Press - Wednesday, October 12, 2011

NEW YORK (AP) — Signs that Europe finally will take bold steps to curb its financial crisis sent stocks higher Wednesday. The battered euro also soared against the dollar and the Japanese yen.

The Dow JonesIndustrial Average briefly erased all of its losses for the year. The index rose 178 points before giving up some of its gains. The Standard & Poor’s 500 index is still down 3.4 percent for the year.

European Commission President Jose-Manuel Barroso presented a plan to strengthen European banks and lower Greece’s debt. It’s being seen as the strongest effort yet to address the region’s debt crisis.

Separately, a Slovakian opposition party leader said that country’s political parties have agreed to approve a deal to strengthen Europe’s financial rescue program. Slovakia’s Parliament blocked the deal Tuesday, setting back efforts to free up more funds for indebted European countries and banks. All 16 of the other countries that use the euro have approved the measure.

The Dow was up 155 points, or 1.4 percent, to 11,571 at 2 p.m. The Standard & Poor’s 500 rose 18, or 1.6 percent, to 1,214. The Nasdaq composite index rose 35, or 1.4 percent, to 2,618.

Banks and financial stocks had the biggest gains. Those companies would have the most to lose if European banks suffer big losses because of a default by the Greek government. A default would cause the value of Greek bonds held by banks in the U.S. and Europe to plunge in value, weakening their balance sheets and making it harder for them to lend. European leaders are working to shore up those banks so they can withstand the impact.

The euro rose to $1.38 against the U.S. dollar from $1.37 late Tuesday. The euro has fallen in recent months as Europe struggled to get control of its debt crisis.

Treasury prices fell and their yields rose as investors bought riskier assets such as stocks instead of U.S. government debt. The yield on the benchmark 10-year note rose to 2.24 percent from 2.16 percent late Tuesday. Demand was slightly weaker than average at an auction of 10-year Treasury notes.

Wal-Mart Stores Inc. rose 1.4 percent. The giant retailer told a group of Wall Street analysts that its campaign to reverse a two-year sales slump is starting to work. Sales at stores open at least a year have risen for three straight months.

Liz Claiborne Inc. rose 36.3 percent after the company said it is selling its namesake brand and several others in an attempt to reverse years of losses. Liz Claiborne hasn’t had an annual profit since 2006.

U.S. companies have begun to release their third-quarter earnings reports, and so far the results have been mixed. PepsiCo Inc. rose 3.2 percent after the company said its income rose because of stronger sales of snacks and beverages, especially overseas.

Alcoa Inc. dropped 1.3 percent after the aluminum maker reported earnings that were weaker than analysts expected. A 12 percent drop in aluminum prices in the July-September period dragged down its results.

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