U.S. stocks rose more than 2 percent on Monday, boosted by a pledge by German and French leaders to tackle the euro-zone debt crisis.

The jump lifted the S&P 500 above its 50-day moving average for the first time since late July, a bullish technical signal that could trigger more buying. The next resistance levels are 1,200 and 1,230.

The S&P 500 is now up more than 10 percent from a low last Tuesday that took the index briefly into a bear market. The advance has been driven by short-covering and managers buying stocks as they try to catch up to the sharp rally.

German Chancellor Angela Merkel and French President Nicolas Sarkozy promised on Sunday to unveil a comprehensive new package to ease the euro zone's debt crisis.

The news also drove up the euro against the dollar, with which the S&P 500 has had a strong correlation.

In stocks, the KBW bank index <.BKX> jumped 4 percent, with JPMorgan Chase & Co gaining 4.2 percent to $31.99 and Bank of America climbing 5.3 percent to $6.21.

There's basically a rally coming off deeply oversold levels. It seems like investors are reacting to even neutral signs of hope the European debt situation will be solved, said Fred Dickson, chief market strategist at The Davidson Cos. in Lake Oswego, Oregon.

What's happening is traders are shorting the dollar, and using funds there, and piling into risk-based assets, including equities, he said.

A move to nationalize Franco-Belgian bank Dexia was seen as an indication that governments would step in and keep large lenders from going under.

The Dow Jones industrial average <.DJI> was up 228.57 points, or 2.06 percent, at 11,331.69. The Standard & Poor's 500 Index <.SPX> was up 27.66 points, or 2.39 percent, at 1,183.12. The Nasdaq Composite Index <.IXIC> was up 58.90 points, or 2.38 percent, at 2,538.25.

Government offices and the Treasury bond market are closed for the U.S. Columbus Day holiday, so equities volume may consequently be lighter than usual.

(Reporting by Caroline Valetkevitch; Additional reporting by Rodrigo Campos; Editing by Jan Paschal)

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