NEW YORK?US stock markets swung higher Monday as sentiment was buoyed by better-than-expected earnings from European banks and strong US data.

The Dow Jones Industrial Average rose 208.44 points (1.99 percent) to 10,674.38 at the end of trade, after falling slightly on Friday.

The tech-rich Nasdaq composite index jumped 40.66 points (1.80 percent) to 2,295.36 while the broader S&P 500 index gained 24.26 points (2.20 percent) at 1,125.86.

"Positive data and bank earnings out of Europe set the tone for a strong buying effort," said analysts at Briefing.com.

The market had been lifted at the opening bell by news from Europe that two of the continent's banking giants posted soaring profits.

HSBC -- Europe's biggest bank -- reported that net earnings in the first half of the year leapt to $6.76 billion, as the number of bad debts in the United States eased and profit from emerging markets increased.

In Paris, BNP Paribas reported unexpectedly strong second-quarter net profit of ?2.1 billion ($2.7 billion), a rise of 31 percent.

Stocks got a further lift on data showing the US manufacturing sector expanded for the 12th straight month in July, beating most analysts' expectations.

The Institute of Supply Management said its manufacturing index fell to 55.5 percent, from 56.2 percent in June, a smaller drop than predicted.

The reading -- which compiles managers' reports on everything from new orders to stock inventories -- beat market expectations of 54.2 percent. A reading above 50 indicates an expanding manufacturing sector.

"July marks 12 consecutive months of growth in manufacturing, and indications are that demand is still quite strong in 10 of 18 industries," the ISM's Norbert Ore said in a statement.

But not everyone was bullish about the report.

"The manufacturing sector has clearly lost some steam over the past two months. The pressing question is whether this reflects a temporary hiccup or the beginning of something more persistent," said analysts at Pierpont Securities.

Meanwhile the Commerce Department reported that construction spending increased 0.1 percent in June. Most analysts had expected the index to decline.

But experts said the rise was thanks to non-home spending.

"The strength in the headline today was driven entirely by the nonresidential component, which climbed 0.4 percent," said Theresa Chen of Barclays Capital.

Alcoa led all 30 Dow components higher in a broad-based rally, its shares up over 4.8 percent.

ExxonMobil shares reached 3.8 percent while those of JPMorgan Chase rose 3.4 percent.

Hewlett Packard stock also rose over three percent.

The bond market fell. The yield on the 10-year US Treasury bond rose to 2.963 percent from 2.920 percent on Friday while that on the 30-year bond rose to 4.063 percent from 4.007 percent. Bond yield and prices move in opposite directions.