Positive reports at home and abroad lift stocks

Share prices surged Monday on some better-than-expected data about the U.S. economy and a dose of good news from Europe, sending the Dow industrials up 208 points and putting Wall Street’s major stock indexes back into the black for 2010.

Most of the U.S. market’s rise came early in the trading session after the largest bank in Europe, HSBC, and the largest bank in France, BNP Paribas, both reported earnings that outpaced analysts’ forecasts.

Investors have worried for months that the debt woes of some European governments could not only threaten the health of the continent’s banks, but also weaken the economy on both sides of the Atlantic. Monday’s results helped soothe those fears, as did an upbeat report on Europe’s manufacturing industry.

“It gives you heart that maybe the global economic recovery is not petering out — that in fact it may be strengthening a bit,” said John Wilson, a strategist at brokerage Morgan Keegan.

Markets also got a lift about 30 minutes into the U.S. trading day as an index of domestic manufacturing activity fell less than expected. The gauge’s latest reading suggests the sector expanded in July for a 12th straight month.

Adding to the stream of welcome news, the Commerce Department reported that construction spending rose 0.1% in June. Economists had expected, on average, a drop of 0.5%.

Federal Reserve Chairman Ben S. Bernanke contributed to investors’ positive outlook, predicting consumer spending, which has been tepid, would grow faster in the coming quarters. But he also said there remained “notable restraints” on the economic recovery.

The Standard & Poor’s 500 index shot up 2.2%, ending the day 1% above where it began the year. The Nasdaq composite index climbed 1.8%, giving it a 1.3% year-to-date gain. Both indexes finished in the black for the first time since June.

The Dow, which last week crossed back into positive territory for the year, is up 2.4% since its Dec. 31 close after gaining 2% on Monday.

All 10 main industry groups in the S&P 500 rose at least 1% for the day, led by a 3.6% increase for the economically sensitive energy sector. Oil futures closed above $80 for the first time in almost four months.

The rally marked a strong start for August after the major indexes posted gains of about 7% in July.

The three major indexes are up about 10% since July 2, when they halted a market “correction” that slashed 14% off the Dow, 16% off the S&P 500 and 17% of the Nasdaq.