US markets surge on latest eurozone hopes

The S&P 500 is 2.9% higher as shares surge after eurozone leaders set a deadline for resolving the single currency area’s debt crisis.

The leading US index was up 34 points at 1,189 an hour after the open to trade above its 50-day moving average for the first time since the end of July. The Dow Jones Industrial Average rose 2.5%, or 286 points, to 11,389.

In the UK, the FTSE 100 rose 1.9% to 5,404, led by a 4.6% rise in Arm Holdings and gains among miners and non-banking financials, with the Cac 40 up 1.5% in France and the German Dax rising 2.3% to 5,806.

Commodities and the euro also rallied, with West Texas Intermediary crude oil up 2.5% to $85 a barrel and the euro trading at $1.36, a rise of 1.7%. Gold was up 2% to $1,668.

Eurozone ministers today postponed next Monday's summit by a week to provide more time for revisions to Greece's second bailout and the expansion of the European Financial Stability Facility.

German chancellor Angela Merkel and French president Nicolas Sarkozy on Sunday said a comprehensive plan to deal with the debt crisis, including a recapitalisation of eurozone banks, would be finalised by the end of the month, without providing further details.

Meanwhile, China announced today it would buy shares in its own banks via the domestic arm of its sovereign wealth fund in a show of support for its largest four financial institutions intended to bolster its struggling stock market.