A trader smiles as he works on the floor of the New York Stock Exchange after the closing bell in New York
A trader smiles as he works on the floor of the New York Stock Exchange after the closing bell in New York on Friday. REUTERS

Stocks jumped on Friday, ending higher for the week after the Italian Senate's approval of economic reforms gave investors some relief from worries about the Eurozone's debt crisis.

After another week of volatility driven by news about the crisis, the S&P 500 managed to end 0.8 percent higher for the week. However, investors remain skittish and are taking out insurance in the options market against future losses.

Banks were among the leaders on a day when growth-oriented stocks turned in the strongest performance. Sentiment received a big boost from falling Italian bond yields, which earlier this week hit the highest level since the euro was introduced in 1999.

Stock-market volatility has been closely tied to European credit markets in recent days.

I'm both positively surprised and reassured that the European situation is not pushing us into a tailspin the way it could have, said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Md., which manages about $13 billion.

A package of austerity measures demanded by the European Union was passed by Italy's Senate and now goes to its lower house, which is expected to approve it Saturday.

Passage would trigger the resignation of Prime Minister Silvio Berlusconi. Former European Commissioner Mario Monti is widely expected to take over as head of a broadly based national unity government.

In debt-strapped Greece, the prime minister-designate, Lucas Papademos, a former vice president of the European Central Bank, will name a new crisis cabinet to roll out austerity plans.

Among the best-performing sectors for the day were an index of semiconductors, up 3.5 percent; the Dow Jones Transportation average <.DJT>, up 2.8 percent, and the S&P energy index <.GSPE>, up 1.8 percent.

For the day, the Dow Jones industrial average was up 259.89 points, or 2.19 percent, to end at 12,153.68. The Standard & Poor's 500 index was up 24.16 points, or 1.95 percent, to finish at 1,263.85. The Nasdaq Composite Index was up 53.60 points, or 2.04 percent, to close at 2,678.75.

For the week, the Dow rose 1.4 percent and the S&P 500 gained 0.8 percent, while the Nasdaq slipped 0.3 percent.

Financial shares, seen as vulnerable because of their exposure to European debt, ranked among the best performers. The Bank of America Corp. rose 3 percent to $6.21, and JPMorgan Chase & Co. gained 1.7 percent to $33.28. The KBW Bank index climbed 2.1 percent.

Despite the week's higher close, options activity suggests some investors fear the gains won't last.

WhatsTrading.com options strategist Frederic Ruffy pointed to a massive January $43-$49 put spread bought on the iShares MSCE EAFE Index , an exchange-traded fund that holds shares of companies from European, Australian, and Far Eastern markets.

Among other advancers for the day, shares of the Walt Disney Co. jumped 6 percent to $36.70 after the media and entertainment group reported a 7 percent gain in revenue and a 30 percent jump in profit, beating expectations.

Advancers sharply outnumbered decliners on the New York Stock Exchange by a ratio of 6 to 1, while on the Nasdaq, nearly four stocks rose for every one that fell.

(Reporting by Caroline Valetkevitch; Additional reporting by Angela Moon; Editing by Jan Paschal)