Financials lift Wall Street

Goldman Sachs Group Inc rose 4.4 percent to $142.12 on rumors of a possible settlement with the Securities and Exchange Commission of fraud charges, though sources familiar with the matter said no agreement had been reached.

Early in the session the S&P 500 briefly fell below its lowest level of the May 6 flash crash and has suffered several days of declines that drove the index down more than 10 percent from an April high.

Germany's parliament approved a law allowing the government to contribute to a 750 billion euro ($937.8 billion) bailout package to help protect the euro.

Some people questioned whether Germany would pass the package, and doing so shows the level of commitment that it and the EU have in addressing this issue, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The Dow Jones industrial average <.DJI> was up 49.80 points, or 0.49 percent, at 10,117.81. The Standard & Poor's 500 Index <.SPX> was up 8.89 points, or 0.83 percent, at 1,080.48. The Nasdaq Composite Index <.IXIC> was up 19.09 points, or 0.87 percent, at 2,223.10.

Bank shares rose a day after the U.S. Senate approved a sweeping overhaul of regulation of Wall Street firms, capping months of wrangling over the biggest changes since the 1930s.

The vote means that the cloud of uncertainty is partially lifted, and clarity is always better for the markets than clouds, Ablin said.

JP Morgan Chase & Co advanced 4.7 percent to $39.61 and was the top boost on the Dow, while Bank of America Corp rose 3.6 percent to $15.83. The S&P financial sector index <.GSPF> rose 2.6 percent.

The S&P hit a session low of 1055.90 before shooting as high as 1080.67 within a half-hour, led by the turnaround in financial stocks. The closing low for the year was 1056.74 in February.

At Thursday's closing level, the S&P 500's 14-day Relative Strength Index had fallen below 30 for the first time since the benchmark hit 12-year lows in March 2009, indicating the index was oversold.

In earnings news, Dell Inc fell 6 percent to $13.46 a day after posting a stronger-than-expected quarterly profit but weak gross margins.

AnnTaylor Stores Corp climbed 8.2 percent to $21.89 after it posted higher-than-expected quarterly earnings.

Salesforce.com Inc rose 4.5 percent to $82.53, a day after it said it plans to increase spending to fuel sales growth.

May equity options and some options on stock indexes will stop trading at Friday's close and settle on Saturday, which may increase volatility.

(Editing by Kenneth Barry)