NEW YORK ( TheStreet) -- U.S. stocks advanced almost 3% Thursday after European leaders reached agreement on a plan to address the region's debt crisis.

The Dow Jones Industrial Average broke above the 12,000 mark for the first time since the beginning of August. The index, up 12% this month, is on track for its biggest monthly point gain ever, after jumping 340 points, or 2.9%, to close at 12,209. Thursday marked the fifth gain for the Dow in the past six sessions.

The S&P 500 gained 43 points, or 3.4%, at 1,285 and the Nasdaq surged 88 points, or 3.3%, at 2739.

Negotiations from Wednesday's summit of European leaders in Brussels dragged overnight, but resulted in a strategic agreement that global markets embraced on Thursday. French President Nicolas Sarkozy said that the European Financial Stability Facility will be leveraged by four to five times to provide guarantees on bonds of struggling eurozone member countries. Additionally, private banks agreed to take a 50% reduction on Greek debt held by private investors.

"The agreement has been anticipated for weeks, and there were plenty of critics popping up to point out all the flaws, but the process has been so agonizing that it is a tremendous relief to the market to finally have something solid rather than just more talk about deals to make potential deals," said RealMoney columnist James "Rev Shark" De Porre in a Thursday blog post.

"The big question now is to what degree the market has already priced in this deal, and whether or not the market can gain more upside momentum from here," he added.

In Europe, London's FTSE rose 2.9%, and Germany's DAX closed 5.4% higher. Overnight, Asian markets surged on the news. Japan's Nikkei Average gained 2%, and Hong Kong's Hang Seng jumped 3.3%.

The dollar index, a measure of the dollar's value against a basket of currencies, was declining 1.87%, and the euro was gaining 2.43% against the greenback. The benchmark 10-year Treasury was down 1 14/32, lifting the yield to 2.376%, the highest since August 2011.

Materials and financials saw some of the strongest gains with Bank of America ( BAC), Alcoa ( AA) and JPMorgan Chase ( JPM) topping the Dow.

On the economic front, growth in the U.S. economy picked up pace to 2.5% in the third quarter from 1.3% in the second quarter. The government's first estimate on third quarter growth was about in line with expectations and taken as good news given that economists had been worried about a double-dip recession in the second half of the year.

Meanwhile, the latest labor data showed the unemployment picture was little changed with initial jobless claims falling by 2,000 to 402,000 in the week ended Oct. 22.

The National Association of Realtors said pending-home sales fell 4.6% in September from the prior month, disappointing expectations for a flat reading.

In Thursday's earnings news, Dow component Exxon Mobil ( XOM) topped Wall Street's profit expectations by a penny with third-quarter earnings of $2.13 a share. Shares ticked 0.8% higher to $81.88.

Fellow Dow component Procter & Gamble ( PG) met analysts' estimates with first-quarter earnings of $1.03 a share. Sales rose 9% to $21.92 billion, topping expectations for revenue of $21.53 billion. The stock edged up 0.5% to $65.26.

Shares of Royal Dutch Shell ( RDS.A) rose 1.3% to $73.31 after the oil company said third-quarter profit doubled on higher oil prices.

Aetna ( AET) saw its stock jump 5% after the health insurer surpassed analyst estimates with third-quarter operating earnings of $1.140 a share. Wall Street had projected a profit of $1.15 a share.

In other corporate news, Sony ( SNE) will buy Ericsson's ( ERIC) 50% stake in the companies' Sony Ericsson mobile phone venture, making the mobile handset business a subsidiary of Sony. Sony acquired the stake for €1.05 billion ($1.47 billion) in cash. Sony's stock was up 7% while shares of Ericsson jumped 9%.

In commodity markets, gold for December delivery gained $24.20 to trade at $1,747.70 an ounce, and the December crude oil contract settled $3.76 higher at $93.96 a barrel.

-- Written by Chao Deng in New York and Melinda Peer in Los Angeles.


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