Stocks climbed on Friday after European Union leaders agreed on measures that partially address the region's crippling sovereign debt crisis, while U.S. consumer confidence rose more than expected in December.

The summit agreed on stricter budget rules for the euro zone, but failed to secure changes to the EU treaty among all the member countries. Investors appeared to embrace the deal, with the FTSEurofirst 300 index of top European shares <.FTEU3> gaining 0.6 percent.

Some were hoping for a bigger deal, but we're seeing a lot more meat behind the effort with these measures, said Dennis Wassung, portfolio manager at Cabot Money Management in Salem, Massachusetts.

We should expect more volatility around this issue going forward, but this is a good step in the right direction.

U.S. consumer sentiment rose more than expected to its highest level in six months in early December due to signs of better labor conditions and an improving outlook on the economy, according to the Thomson Reuters/University of Michigan's preliminary reading on their overall index of consumer confidence.

Equities have risen in anticipation of a plan, with the S&P 500 up 6.5 percent since November 25. But Wall Street tumbled on Thursday after the European Central Bank dashed hopes for additional bond buying. Markets have been volatile, reacting to every headline out of Europe.

Banks, which have been pressured by the uncertainty, rallied on the news. Bank of America Corp rose 1.3 percent to $5.66, while JPMorgan Chase & Co added 1.7 percent to $32.75, and Citigroup Inc rose 2.3 percent to $28.37. The Financial Select Sector SPDR rose 1.2 percent.

The Dow Jones industrial average <.DJI> was up 139.67 points, or 1.16 percent, at 12,137.37. The Standard & Poor's 500 Index <.SPX> was up 15.06 points, or 1.22 percent, at 1,249.41. The Nasdaq Composite Index <.IXIC> was up 26.68 points, or 1.03 percent, at 2,623.06.

Some caution signals, though, were sent by major U.S. companies. DuPont and Co fell 6.2 percent to $43.60 after the Dow component cut its 2011 profit outlook, citing slower growth in some businesses.

Chipmakers will be in focus a day after Texas Instruments Inc cut its revenue outlook for the current quarter, warning of lower demand. Altera Corp also cut its fourth-quarter revenue outlook late Thursday.

Texas Instruments fell 4.5 percent to $28.58 while Altera was off 2.8 percent to $34.58.

(Reporting By Ryan Vlastelica; Editing by Jan Paschal)