On Friday, the euro jumped nearly 2 percent, while oil prices surged, and world stocks rallied after leaders of the eurozone agreed on measures for cutting the soaring borrowing costs in Italy and Spain, in addition to directly recapitalizing regional banks.

After the region's leaders agreed that European Union bailout funds may be used for stabilizing bond markets to support countries that comply with EU policy recommendations, Spanish and Italian government bond yields fell sharply, while safe-haven U.S. and German government debt sold off.

European Union leaders also agreed that creation of a single supervisory body for euro zone banks, would be discussed by year-end that is the first step toward a banking union in the region.

Markets rallied on the news that almost caught investors by surprise as expectations for meaningful steps to tackle the debilitating debt crisis had all but disappeared in the run-up to the two-day EU summit.

"We've gotten used to being underwhelmed by the outcomes, so with little to no expectations for success, the fact that it appears we are going to get something substantial is a real important positive for the market in the near term," said Art Hogan, managing director of Lazard Capital Markets in New York.

"It's inching closer to a banking union and the closer we get to a banking union would put (the EU) well on the road to a fiscal union."

The single currency, euro, surged against the U.S. dollar to climb as high as $1.2692. Wall Street stocks rose more than 2 percent, the Dow Jones industrial average .DJI closed up 277.83 points, or 2.20 percent, at 12,880.09. The Standard & Poor's 500 Index .SPX ended up 33.12 points, or 2.49 percent, at 1,362.16. The Nasdaq Composite Index .IXIC finished up 85.56 points, or 3.00 percent, at 2,935.05.