Wall Street Gains Over 2 percent on Hope for Eurozone Fix

Stocks extended a recent rally and rose more than 2 percent on Tuesday on euro- zone officials' efforts to solidify the region's rescue fund in an attempt to alleviate the debt crisis.

Major indexes rose for a third straight session, with the S&P 500 up more than 5 percent over the period, its largest three-day percentage gain since mid-August.

European officials considered various approaches to maximize the bailout fund and to recapitalize banks.

Market volatility could remain as traders react to headlines and attempt to gauge the commitment of governments and institutions as they work to prevent a Greek default. Over recent weeks, equities have been highly sensitive to Europe's debt issues and the efforts to limit the fallout. Last week, the Dow had its biggest weekly percentage loss since October 2008, when Wall Street was roiled by the financial crisis.

The market had been pricing in the possibility of a recession, so the news that we could possibly get some kind of resolution in Europe is very positive, said Jerry Harris, president of asset management at Sterne Agee in Birmingham, Alabama.

We had a washout in stocks, some really extreme moves, so any news on the positive side really helps us, added Harris, who helps oversee $500 million in assets.

The Dow Jones industrial average climbed 290.93 points, or 2.63 percent, to 11,334.79. The Standard & Poor's 500 Index rose 28.64 points, or 2.46 percent, to 1,191.59. The Nasdaq Composite Index shot up 63.71 points, or 2.53 percent, to 2,580.40.

Stocks also got a boost as investors rebalanced their portfolios in the last days of the quarter. The wide gap in performance between equities and bonds, favoring government debt so far this quarter, may partly reverse.

All these end-of-quarter issues are amplifying the moves that we've been seeing in stocks, said Paul Simon, chief investment officer at Tactical Allocation Group in Birmingham, Michigan. I don't have a lot of faith in the moves we've been seeing.

The S&P materials index was up 3.3 percent and an S&P index of energy stocks added 3.2 percent as commodity prices rallied on hopes that Europe would avoid a recession. Mining and energy shares were the top performers among large-cap stocks.

Copper prices jumped 4.4 percent, helped by a 1 percent drop in the dollar index, while U.S. crude futures jumped 4.4 percent. Dow component Exxon Mobil Corp rose 2.9 percent to $73.81.

U.S.-listed shares of Research in Motion surged on market speculation that activist investor Carl Icahn had taken a stake in the struggling BlackBerry maker. The stock was one of the top gainers in the Nasdaq 100, climbing 7.6 percent to $23.32.

On the downside, Walgreen Co fell 5.4 percent to $34.10 after it signaled that it wouldn't budge in its battle with Express Scripts Inc over what the pharmacy benefits manager will pay for prescriptions. Express Scripts' stock rose 1.3 percent to $39.84.

In the latest economic data, U.S. consumer confidence was little changed in September, the Conference Board said, while its gauge of labor market conditions deteriorated to its worst since 1983.

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)