Stocks set for strong open on Europe hope

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NEW YORK (CNNMoney) -- U.S. stocks were poised to open sharply higher Monday, as investors welcomed a pledge from European leaders to unveil a plan to solve the European debt crisis by the end of the month.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up more than 1% ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

Over the weekend, German Chancellor Angela Merkel and French President Nicolas Sarkozy said they have come up with a plan to get Europe's festering debt problems under control. The plan, which will include recapitalizing European banks, will be presented to world leaders at the G20 meeting in Cannes Nov. 3 and 4.

The euro surged 1.6% versus the dollar on the new glimmer of hope. The news helped boost financial stocks in Europe and the United States.

French banks Credit Agricole, Societe Generale and BNP Paribas were all up between 1.6% to 4%. Shares of Bank of America (BAC, Fortune 500) surged nearly 4%, while Citigroup's (C, Fortune 500) stock rose 3% and Goldman Sachs (GS, Fortune 500) shares gained 1.5%.

While talk of a strategy is encouraging, the lack of details is keeping investors and markets on edge.

"There is still a healthy bill of skepticism because we've been here before many times before,"said Michael Hewson, analyst at CMC Markets in London. "All Merkel and Sarkozy have done is reiterated their statements from earlier and kicked the can down to Cannes."

Meanwhile, troubled Franco-Belgian bank Dexia became the first casualty of the eurozone's money woes. On Monday, the bank accepted a €90 billion joint bailout from France, Belgium and Luxembourg.

Europe's debt crisis: 5 things you need to know

Investors have been quick to react to headlines concerning Europe's debt crisis.

"Dexia passed the stress test earlier this summer with flying colors, yet here we are now, three months later, and it needs a bailout," said Hewson. "I think that begs the question as to whether Dexia is a special case or if it's one in a long line of other bailouts.

On Friday, U.S. stocks ended lower as downgrades for Italy, Spain and 12 U.K. financial institutions overshadowed a better-than-expected report on the U.S. job market.

World markets: European stocks were higher in afternoon trading. Britain's FTSE 100 (UKX) rose 1%, the DAX (DAX) in Germany gained 0.6% and France's CAC 40 (CAC40) climbed 0.9%.

Asian markets ended mixed. The Shanghai Composite (SHCOMP) slipped 0.6%, and the Hang Seng (HSI) in Hong Kong inched higher. Japan's Nikkei (N225) was closed for a holiday.

Currencies and commodities: The dollar was lower versus the British pound and the Japanese yen.

Oil for November delivery rose $1.50 to $84.48 a barrel.

Gold futures for December delivery added $30.20 to $1,666 an ounce.

Companies: Netflix (NFLX) shares rallied 5% in premarket trading after the company ditched a plan announced last month to spin-off its DVD streaming business and rename it Qwikster.

Yahoo (YHOO, Fortune 500) shares climbed 3% as talk about a possible buyout of the struggling company continued to swirl. Following chatter that Microsoft (MSFT, Fortune 500) and Chinese e-commerce giant Alibaba were considering a bid for Yahoo, Reuters reported that the company could also be sold to a private equity firm.

Dow components Alcoa (AA, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) report quarterly financial results later this week, as well Pepsico (PEP, Fortune 500) and Google (GOOG, Fortune 500). All four heavyweights are among the S&P 500 companies.

Economy: No economic reports are due out Monday.

Bonds: The bond market is closed for Columbus Day.