Dow leaps 2.3%: Stocks end higher on earnings, Europe hopes

— -- Stocks jumped Friday after several big companies reported solid third-quarter earnings.

The Dow Jones industrial average gained 267 points, closing up 2.3% and coming within 200 points of the 12,000 level. The S&P 500 gained 1.9%, and the Nasdaq composite finished up 1.5%.

The S&P 500 closed higher Friday for the third straight week

Fast-food giant McDonald's rose 3% after its profit increased 9%, beating analysts' expectations.

More than six stocks rose for every one that fell on the New York Stock Exchange. Trading volume was average at 4.3 billion.

Industrial and financial titan General Electric boosted its net income by 18%. Microsoft's rose 6%. Revenue for both companies beat Wall Street estimates.

Verizon said its adjusted earnings were slightly higher than analysts had expected. Shares rose 0.9%.

The encouraging corporate news was in line with recent indications that the U.S. economy strengthened in September after a very weak summer. On Friday the government said unemployment fell last month in half of U.S. states and was unchanged in 11. That's much better than August, when unemployment rose in 26 states.

Markets remain hopeful that Europe will come up with a comprehensive plan to deal with its crippling debt crisis, albeit a few days later than initially thought.

European markets closed sharply higher as investors hoped that European leaders will agree on a package of measures to address the region's debt crisis in time for a summit scheduled tentatively for Wednesday. Germany's DAX index rose 3.6%. France's CAC 40 and Italy's FTSE MIB rose 2.8%.

Traders had hoped for a plan to be forged at a summit on Sunday. But talks between France and Germany this week have broken down repeatedly. They said Thursday there will be no deal before a second summit next week. The two countries disagree about the size of losses that private banks should take on Greek debt that they own, among other issues.

"The news of a delay in the announcement of a deal on resolving certain aspects of the eurozone debt crisis failed to dent confidence," said Derek Halpenny, an analyst at the Bank of Tokyo-Mitsubishi UFJ.

However, he said the risks remain for assets such as stocks and the euro, as the delay "highlights the difficulties Europe is having in reaching a final resolution to the crisis."

Traders will continue to monitor all talk surrounding a meeting of the eurozone's 17 finance ministers later Friday in Brussels, ahead of the arrival of their leaders over the weekend.

For now though, stocks and the euro are holding their own, as they have largely done so over the past few weeks. Stocks have recovered a chunk of their losses for the year as investors became confident that the 17 countries that use the euro were preparing the three-pronged solution to the debt crisis.

The euro was trading solidly despite the debt deal delay, up 0.1% at $1.3778.

Earlier, Asian gains were muted after a sluggish start of the trading day.

Japan's Nikkei 225 index closed little changed at 8,678.89 while Hong Kong's Hang Seng added 0.2% to 18,025.72.

Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 0.6% to 2,317.28, its lowest close in 31 months. The Shenzhen Composite Index lost 1.6% to 959.12.

In the oil markets, prices were steady. Benchmark crude for December delivery was up 7 cents at $86.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 22 cents to settle at $86.07 in New York on Thursday.