U.S. stocks rose to their highest in more than two months on Friday before a weekend European Union debt-crisis summit that could potentially remove a major headwind for markets and allow investors to focus on corporate results.

Obstacles remain to resolving the crisis, and important differences still separate major players France and Germany, but investors apparently took it as a positive that their leaders have set a target date of Wednesday for finding a solution.

It's that hope, it's that anticipation that they have created, said Rob Russell, president of Russell & Company in Dayton, Ohio.

The French and the Germans both have a lot to risk. They both have somewhat different ideas they are going to have to have some kind of solution.

The Dow Jones industrial average <.DJI> gained 194.59 points, or 1.69 percent, to 11,736.37. The Standard & Poor's 500 Index <.SPX><.INX> climbed 18.52 points, or 1.52 percent, to 1,233.91. The Nasdaq Composite Index <.IXIC> rose 36.98 points, or 1.42 percent, to 2,635.60.

Recent gains have pushed the S&P 500 to the top end of its trading range between 1,230 and 1,250 where it has struggled to advance. Many investors are looking for progress in Europe before looking to earnings to push equities higher.

France's push to use more European Central Bank money to fight the euro zone debt crisis ran into strong resistance from Germany and other EU partners. For details, see

Equity markets have been susceptible to wild swings in recent weeks as traders latch on to varying headlines on Europe's debt crisis, leaving markets prone to volatility heading into the weekend.

Consumer discretionary stocks were the best performing among S&P sectors after McDonald's Corp reported higher-than-expected quarterly profit, helped by new menu items in the United States and a tiered-price menu in Europe that includes premium and lower-priced selections.

Shares of the fast-food restaurant chain rose 2.9 percent to $91.55. The S&P consumer discretionary sector <.GSPD> gained 2.3 percent.

Among industrial companies, Honeywell International Inc shares rose 3.7 percent to $50.29 after it reported better-than-expected results and lifted its earnings outlook. The commercial aerospace company rose as high as 5 percent, its biggest gain since August 23.

General Electric Co's third-quarter earnings rose, meeting Wall Street's estimate, driven by strong demand from Brazil, Russia and China. The shares fell 1.5 percent to $16.38.

According to Thomson Reuters data, of the 133 companies in the S&P 500 that have reported earnings through Friday, 68 percent have topped analysts' expectations.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

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