Stocks rose 2 percent on Wednesday amid optimism over talks to contain the euro zone debt crisis.

German and French leaders urged Greece to implement all financial reforms strictly and effectively to ensure continued euro zone assistance and reduce any chance of a debt default, a German government spokesman said.

Adding to relief for investors, Italian Prime Minister Silvio Berlusconi won a confidence vote on an austerity plan for the euro zone's third-largest economy.

Concerns about spreading debt problems in the euro zone have battered stocks for weeks. The benchmark S&P 500 is down 7.6 percent so far for the month.

What we're watching is global hedge funds, at least momentarily, throw the risk-trade switch back on, directing funds away from the dollar and into the euro and into global equities, said Fred Dickson, chief market strategist at D.A. Davidson & Co. Lake Oswego, Oregon.

The Dow Jones industrial average <.DJI> was up 203.74 points, or 1.83 percent, at 11,309.59. The Standard & Poor's 500 Index <.SPX> was up 21.77 points, or 1.86 percent, at 1,194.64. The Nasdaq Composite Index <.IXIC> was up 53.88 points, or 2.13 percent, at 2,586.03.

(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)