U.S. stocks surged in the last hour of trading on a report that European Union officials are coordinating a rescue for European banks.

The S&P 500 Index rallied 24.72 points, or 2.25 percent, to close at 1,123.95. The Dow Jones Industrial Average climbed 153.41 points, or 1.44 percent, to end at 10,808.71. The Nasdaq Composite jumped 2.95 percent.

The euro surged over 100 pips against the U.S. dollar.

The Financial Times reported that the European Union finance ministers are “examining ways of co-ordinating recapitalisations of financial institutions.”

Meeting in Luxembourg, the officials concluded “they had not done enough to convince financial markets that Europe’s banks could withstand the current debt crisis.”

Shares of Deutsche Bank AG (USA) (NYSE:DB) surged 4.93 percent, shares of U.S.-traded Barclays (NYSE:BCS) jumped 1.83 percent, and shares of U.S.-traded Credit Suisse (NYSE:CS) rose 3.14 percent.

Earlier, the market was trading down on European debt crisis fears as a meeting of European Union finance minister on Monday did not produce any concrete solutions.

Investors were concerned that potential losses on Greek government bonds would cripple under-capitalized European banks and wreak havoc on the European financial system. 

The latest report from FT ameliorated such concerns.