U.S. stocks advanced

U.S. stocks advanced, sending the Standard & Poor’s 500 Index toward the highest level since August, on speculation European leaders are moving closer to an agreement to contain its sovereign debt crisis.

European finance ministers meet in Brussels today to lay the groundwork for an Oct. 23 gathering of government leaders that had been the deadline for a solution to the debt crisis. A further summit was scheduled for Oct. 26 yesterday after Germany and France said the European Union needs more time to seal a “global and ambitious” accord. In the U.S., Federal Reserve Governor Daniel Tarullo said the central bank should consider resuming purchases of mortgage bonds to boost growth.

Dow 11,755.82 +214.04 +1.85%, Nasdaq 2,633.99 +35.37 +1.36%, S&P 500 1,235.09 +19.70 +1.62%

American banks rallied following gains in European lenders. Bank of America (ВАС) added 1.4 percent to $6.56. Morgan Stanley rose 2.1 percent to $16.97.

Investors also monitored third-quarter earnings reports. McDonald’s added 2.7 percent to $91.38. Chief Executive Officer Jim Skinner has sought to draw American diners with low- priced menu items, such as the $1 McDouble burger, as the nation’s 9.1 percent unemployment rate saps consumer confidence. Sales in the U.S. were driven by fruit smoothies, Chicken McNuggets and breakfast foods, the company said.

Honeywell climbed 5.1 percent to $50.93 as the company also increased its full-year forecast. Honeywell and other U.S. manufacturers have posted earnings growth this year amid a slowing economy by keeping costs in check and expanding abroad. Aerospace sales rose 8 percent in the quarter, the company said.

Seagate Technology Plc surged 22 percent to $14.74. The world’s largest maker of computer disk drives reported first- quarter earnings excluding some item of 34 cents a share, beating the average analyst estimate by 8.3 percent, Bloomberg data show. The company had its rating raised at ThinkEquity Partners and Robert W. Baird & Co.

Energy and raw material producers gained as the S&P GSCI Index of commodities advanced 1.6 percent. Alcoa Inc. (AA), the largest U.S. aluminum producer, rose 2 percent to $10.15. ConocoPhillips added 2.2 percent to $71.78.

General Electric Co. (GE) dropped 1.4 percent to $16.40 as tighter profit margins in industrial businesses from energy to aviation overshadowed third-quarter growth led by the finance unit.