NEW YORK (CNNMoney) -- World markets rallied Friday after European Union member nations approved an economic growth package and hatched a deal to ease the recapitalization of struggling banks.
"Despite the seemingly growing rift between Germany and the rest of the major eurozone governments, these morning headlines are enough to cheer the markets for now," wrote Deutsche Bank analysts Jim Reid and Colin Tan in a research note.
London's FTSE () closed higher by 1%, while the DAX ( ) in Frankfurt rose 2.4% and the CAC 40 ( ) in Paris surged by 3.2% at the close of trading. Madrid's IBEX 35 soared 5.7%.
EU leaders agreed to form a single supervisory body for the continent's banks. That body would have the ability to aid the banks without adding to the sovereign debt of nations.
"The aim was to have this in place by the end of the year and to break the 'vicious circle' between banks and sovereigns," the Deutsche Bank analysts wrote.
Most European bank stocks rode the wave. In Paris, BNP Paribas () and Credit Agricole ( ) both closed higher by more than 7% and Societe Generale ( ) surged 11%. In Frankfurt, Commerzbank ( ) soard 8% while Deutsche Bank ( ) jumped 7%. In Madrid, Banco Santander ( ) also jumped 47%.
Asian markets also rallied. The Hang Seng () in Hong Kong closed higher by 2.4%, Tokyo's Nikkei ( ) was 1.5% higher at the close, and the Shanghai Composite ( ) was up by 1.2%.
The rising tide spread to the United States, with the Dow Jones industrial average ( ), Nasdaq ( ) and S&P ( ) all adding significant gains.
|China and Fed fallout to weigh on stocks|
|Japan stocks plunge on weak China data|
|Tesla repays federal loan nearly 10 years early|
|China factory activity contracts in May|
|How police can find your deleted text messages|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.73%||3.65%|
|15 yr fixed||2.85%||2.79%|
|30 yr refi||3.72%||3.64%|
|15 yr refi||2.85%||2.78%|
Today's featured rates: