Stocks gained on Wednesday as the International Monetary Fund sought to help countries hit by the European debt crisis, while Goldman Sachs' healthy earnings gave the financial sector another boost.

Stronger-than-expected earnings from Goldman Sachs Group Inc followed disappointing results from Citigroup on Tuesday and JPMorgan Chase & Co last week.

Goldman shares jumped 7.4 percent to $104.89.

Another boost for the banking sector, though, was a report the IMF is seeking to boost its war chest by $600 billion to help countries reeling from the crisis, even though some nations insist Europe must first do more to support ailing members, according to sources.

Any time liquidity is added to the financial system, it gives financials a little bit of breathing room, and it will result in higher prices for the banks, said Kevin Caron, market strategist at Stifel, Nicolaus & Co, in Florham Park, New Jersey.

At the same time, Greece and its creditors resumed negotiations on terms of a planned debt swap, hoping to overcome an impasse in talks and stave off a painful default.

The S&P financial index <.GSPF> shot up 1.4 percent. It has climbed about 6 percent so far this year, outperforming the S&P 500.

Home builders' shares surged after data showed U.S. homebuilder sentiment unexpectedly jumped in January to its highest level in 4-1/2 years. The PHLX housing index <.HGX> climbed 3.2 percent.

The Dow Jones industrial average <.DJI> was up 73.30 points, or 0.59 percent, at 12,555.26. The Standard & Poor's 500 Index <.SPX> was up 11.10 points, or 0.86 percent, at 1,304.77. The Nasdaq Composite Index <.IXIC> was up 35.67 points, or 1.31 percent, at 2,763.75.

The benchmark S&P 500 again rose above against the 1,300 level, a key resistance point that analysts said could trigger more selling if it is convincingly pierced.

Within the tech sector, Yahoo Inc jumped 3 percent to $15.89 a day after co-founder Jerry Yang said he was severing all formal ties with the company he started in 1995. Shareholders had blasted Yang for impeding investment deals that could have transformed the Internet media group.

In other bank results, Bank of New York Mellon Corp slid 5.2 percent to $20.17 after the world's No. 1 custody bank said fourth-quarter earnings fell.

Another big custody bank, State Street Corp slid 6.7 percent to $39.90 after saying it accelerated an expense- control program, a sign it still sees continued weakness in global capital markets.

Financial results will remain in focus, with reports from Bank of America Corp and Morgan Stanley later this week. In late afternoon trading, Bank of America's stock was up 3.9 percent at $6.73 and Morgan Stanley's shares were up 5.1 percent at $17.08.

(Reporting By Caroline Valetkevitch, Additional reporting by Ryan Vlastelica; Editing by Jan Paschal)