Stocks set to pop on Europe debt deal

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NEW YORK (CNNMoney) -- U.S. stocks were set to rally at the open Thursday, after European Union leaders agreed to expand Europe's bailout fund and take major losses on Greek bonds -- the latest step in an ongoing effort to curb the region's debt crisis.

The Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were about 2% higher. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

The eurozone debt agreement came early Thursday, at the end of marathon talks aimed to find a solution to the debt crisis in Greece, instability in the banking sector and an inadequate bailout fund.

World markets jumped on the news, led by the financial sector. Credit Agricole and BNP Paribas both rose more than 12% in Paris, while Deutsche Bank AG and Commerzbank in Germany rallied more than 14%. In U.S. trading, shares of Morgan Stanley (MS, Fortune 500) and Bank of America (BAC, Fortune 500) were up more than 6%.

"It's a step in the right direction," said James Schroeder, executive vice president and head of asset management at DHR International. "At least they are addressing the issues. The real question is how they are going to do this; and if they stall and no progress is made after all this, markets will recognize that and pull back."

All U.S. indexes closed higher on Wednesday, as investors started betting that European leaders would seal a deal addressing the debt crisis.

World markets: European stocks soared in midday trading. Britain's FTSE 100 (UKX) climbed 3%, the DAX (DAX) in Germany rallied 5%, and France's CAC 40 (CAC40) jumped 5.5%.

Asian markets ended higher. The Shanghai Composite (SHCOMP) edged up 0.3%, the Hang Seng (HSI) in Hong Kong gained 3.3% and Japan's Nikkei (N225) rose 2%.

The Bank of Japan announced early Thursday it is boosting purchases of government bonds to help stimulate the economy, warning of a strong yen and ongoing risks in global financial markets and overseas economies.

Economy: The U.S. government reported that third-quarter gross domestic product -- the broadest measure of a country's economic activity -- increased at an annual rate of 2.5%. The pace of growth was in line with expectations, and was up from 1.3% in the second quarter.

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The Labor Department said weekly jobless claims eased by 2,000 to 402,000 last week -- also in line with expectations.

Companies: Exxon Mobil (XOM, Fortune 500) posted a quarterly profit of $10.3 billion before the opening bell, a 41% increase from a year ago, thanks to higher oil and gas prices. Shares of the oil giant rose 2% in premarket trading.

Procter & Gamble (PG, Fortune 500) shares edged up 1%, after the company reported a 9% increase in sales for the latest quarter.

Currencies and commodities: The dollar fell against the euro, the Japanese yen and the British pound.

Oil for December delivery gained $2.70 to $92.90 a barrel.

Gold futures for December delivery edged down $4.30 $1,719.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.13% from 2.21% late Wednesday.