Stocks rose 1 percent in a third day of gains on Wednesday after European leaders displayed new urgency in efforts to contain the euro zone debt crisis.

German and French leaders called on Greece to implement all financial reforms strictly and effectively, a German government spokesman said.

Greece expects policymakers to report that Athens is on track to fulfill its targets and receive the aid it needs to avoid any chance of a debt default, a Greek official said.

Adding to the relief for investors, Italian Prime Minister Silvio Berlusconi won a confidence vote on an austerity plan for Italy, the euro zone's third-largest economy.

Fears that Europe's crisis could plunge it into recession and drag down global growth have hammered stocks for weeks. Stocks that are typically well positioned to benefit from economic growth, such as General Electric and other industrial shares, were top gainers.

What we're watching is global hedge funds, at least momentarily, throw the risk-trade switch back on, directing funds away from the dollar and into the euro and into global equities, said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.

Sentiment received an early boost after Europe's top bureaucrat said plans for a common euro zone bond, seen by many as a key tool to ease the region's festering debt crisis, would soon be presented.

The Dow Jones industrial average <.DJI> was up 140.88 points, or 1.27 percent, at 11,246.73. The Standard & Poor's 500 Index <.SPX> was up 15.81 points, or 1.35 percent, at 1,188.68. The Nasdaq Composite Index <.IXIC> was up 40.40 points, or 1.60 percent, at 2,572.55.

The S&P 500 is still down 11.6 percent since July 22, roughly when the market's recent slide began.

The actions by European leaders followed an urgent call by U.S. Treasury Secretary Timothy Geithner for them to act forcefully to solve Europe's debt crisis. Geithner said they have the financial and economic capacity to do so.

Geithner will attend an informal meeting of EU finance ministers in Poland on Friday.

Conglomerate GE ended 2.5 percent higher at $15.79. Tech stocks also were among top gainers, and the Nasdaq outperformed the other two major indexes for a third day.

Shares of Nvidia Corp jumped 5.2 percent to $15.28, while SanDisk Corp , another chip maker, rose 4.2 percent to $42.66.

Dell Inc added 3.3 percent to $14.86 a day after its board authorized an additional $5 billion stock buyback program.

Volume was 8.5 billion shares on the NYSE, Amex and Nasdaq, above last year's average of roughly 7.6 billion.

Advancers beat decliners by nearly 11 to 4 on the NYSE and by about 9 to 3 on the Nasdaq.

The day's U.S. economic data was mostly brushed aside by investors. Growth in retail sales stalled in August while business inventories rose slightly less than expected in July, suggesting caution by firms about demand at the start of the third quarter.

(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry and Leslie Adler)

(Corrects to make clear that Moody's downgrade of Societe Generale was not due to its exposure to Greece. The error also appeared in previous versions of this story)

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