Stocks erase losses for the week

Stocks surged Friday, the markets erasing their losses for the week, after Italy and Greece moved closer to getting their financial crises under control. The Dow Jones industrial average jumped back above 12,000.

Italy's benchmark stock index leaped 3.7 percent and its borrowing costs plunged after the country's Senate passed a crucial austerity budget demanded by the European Union. Other European stock markets and the euro also pushed higher.

The passage clears the way for Italian Premier Silvio Berlusconi, widely considered an obstacle to economic reform, to step down. The yield on Italy's benchmark two-year bond dropped 0.43 percentage point to 5.69 percent, a sign bond investors think Italy will succeed in managing its massive debt load.

The Dow jumped 259.9 points, or 2.2 percent, to 12,153.7. It closed below 12,000 the previous two days. Friday's rally pushed the Dow up 1.4 percent for the week.

Together with a 112-point gain the day before, the Dow has now made up most of the 389-point plunge it took on Wednesday. That sell-off was triggered by a spike in Italy's borrowing costs and a breakdown in talks to name a new prime minister in Greece.

In Greece, too, there was good news for the markets Friday. Lucas Papademos, a former banker, was sworn in as interim prime minister. Papademos took over a coalition government after a two-week political crisis that jeopardized the country's ability to continue receiving emergency loans.

Plenty of uncertainty still hangs over financial markets. Brian Gendreau, senior investment strategist at Cetera Financial Group, said he expects the S&P 500 to trade in a range of 1,200 to 1,275 until Europe's debt crisis gets closer to resolution and the U.S. Congress signs off on a larger debt-cutting plan. "We still don't have a real resolution on either side of the Atlantic," he said.