Stocks rose sharply on Monday as investor sentiment was buoyed by a renewed pledge by France and Germany to come up with a plan to tackle the euro zone debt crisis by month's end.

Chancellor Angela Merkel and French President Nicolas Sarkozy promised on Sunday to unveil a comprehensive new package to ease the euro zone's debt crisis by the end of October, but offered no details.

International pressure has been building for bold steps from Europe to avert a global economic backlash.

In a move that could pressure other euro zone governments to strengthen their banks, Franco-Belgian lender Dexia agreed to nationalize its Belgian banking division and secured state guarantees in a rescue.

Internationally, you are looking at Dexia and the euro zone making progress toward a real sustainable solution, said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

We can look at this as a positive this morning and certainly on the headline it looks like a positive driver for market sentiment this morning, but this is more of the same.

The German-French pledge helped lift financials, with the KBW bank index <.BKX> up 3.2 percent and JPMorgan Chase & Co gaining 4.2 percent to $32.

The Dow Jones industrial average <.DJI> jumped 205.41 points, or 1.85 percent, to 11,308.53. The Standard & Poor's 500 Index <.SPX> rose 24.21 points, or 2.10 percent, to 1,179.67. The Nasdaq Composite Index <.IXIC> climbed 44.89 points, or 1.81 percent, to 2,524.24.

The benchmark S&P 500 climbed above its 50-day moving average of 1,175.61 for the first time since late July, a level seen by analysts as a key resistance point.

Netflix Inc jumped 6.6 percent to $124.95 after its chief executive reversed an unpopular decision to separate the DVD rental business and online video streaming service.

While U.S. stock markets will be open, government offices and the bond market are closed for the U.S. Columbus Day holiday and may produce lighter-than-usual equities volume.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)