Euro debt news lifts stocks after last week's loss

Signs that a widespread European debt crisis could be averted helped send stocks up sharply Monday.

French banks agreed to accept slower repayment of Greece's debt. That would give Greece more time to meet its other immediate financial obligations. French bondholders hold about $21.3 billion in Greek government debt. Greek lawmakers are also debating austerity measures that must pass before the country can receive another financial rescue package to help avoid default.

The U.S. government, meanwhile, said that spending by consumers decreased in May, after adjusting for inflation. April's figures were also revised downward, revealing the first decline since January 2010. Consumer spending accounts for 70 percent of economic activity.

Gas prices nearing $4 per gallon in late April and early May curtailed spending on retail goods such as televisions and clothes. Since then, gas prices have fallen to a national average of $3.57 per gallon. Oil prices have declined steeply over the last few weeks, which should eventually translate into even lower pump prices. Lower gas prices could help boost consumer spending in other areas in the coming months.

In late afternoon trading, the Dow Jones industrial average rose 157 points, or 1.3 percent, to 12,093. The Standard & Poor's 500 index rose 15, or 1.2 percent, to 1,283. The Nasdaq composite index rose 40, or 1.5 percent, to 2,692.

Analysts said the rally was stronger than the economic news would suggest in part because many traders invest when indices hit certain pre-determined price levels.

Read more