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News that Cyprus is coming close to a deal that would stave off a debt default and potentially stabilize its troubled banking sector lifted stocks deep into the green Friday.

Today's Markets

As of 3:40 p.m. ET, the Dow Jones Industrial Average climbed 80.7 points, or 0.57%, to 14503, the S&P 500 rose 9.2 points, or 0.6%, to 1555 and the Nasdaq Composite gained 19.1 points, or 0.6%, to 3242.

It's been a wild week for the global markets. In what has become a theme in the past couple years, events in Europe have sent stocks rising and falling in fairly volatile trading. Indeed, the CBOE's VIX, sometimes referred to as Wall Street's fear gauge, has spiked some 20% this week. 

Cyprus teetered on the brink of financial ruin Friday. The country needs to find $7.5 billion to use as a down payment for a $13 billion international rescue required to stave off a debt default. A previous plan to levy bank deposits failed to garner any support in parliament earlier this week. Then a plea to Russia for a bailout in exchange for rights to certain natural resources also fell through as Moscow walked away from negotiations. However, the country's ruling party said a deal that is backed by the European could be on the horizon, according to a report from Reuters.

A spokesperson for Cypriot President Nicos Anastasiades said the next few hours will "determine the future of this country." Anastasiades is currently locked in what the spokesperson called "hard negotiations" with the troika, which is composed of the European Council, European Central Bank and International Monetary Fund. The country's parliament is also set to vote on yet another plan to fund the bailout on the day. 

Time is running out quickly for Cyprus. The ECB said Thursday that it won't provide emergency liquidity to its banks after Monday if it doesn't receive an official rescue. In a sign of just how serious the issue is, Greek banks were in the process of acquiring deposits of branches of Cypriot banks in Greece, according to multiple media reports. 

Still, analysts at Barclays told clients Friday morning "market pressure and contagion from Cyprus to other periphery countries remain contained." That is a critical factor since Cyprus is not generally seen as systemically significant on its own, but trouble there could spark a selloff in Italian and Spanish bonds. Such a drop would send borrowing costs for the eurozone's third and fourth biggest economies jumping, and re-ignite a much more dangerous debt crunch that the ECB has been successful at containing since July. 

Perhaps in a sign of hopes that the Cyprus troubles will be fenced into the small island nation, yields on Italian, Spanish and even Greek debt fell slightly, while the euro advanced 0.42% to $1.2953. 

Also on the European front, a closely-watched report from the Ifo Institute showed German business sentiment unexpectedly dropping in March. The gauge fell to 106.7 in March from 107.4 the month prior. 

"The German economy remains on track in a challenging environment thanks to strong domestic demand," the Ifo report said. 

There were no significant economic reports due on the U.S. economy on Friday. 

In corporate news, Nike (NKE) shares soared more than 8% after the apparel-maker posted better-than-expected quarterly profits, and strong futures sales data. 

Energy futures were lightly changed. The benchmark U.S. crude oil contract rose 45 cents, or 0.49%, to $92.90 a barrel. Wholesale New York Harbor gasoline dipped 0.12% to $3.067 a gallon. In metals, gold slipped $7.40, or 0.45%, to $1,606 a troy ounce. 

Foreign Markets

The Euro Stoxx 50 fell 0.02% to 2683, the English FTSE 100 rose 0.23% to 6403 and the German DAX dipped 0.15% to 7921. 

In Asia, the Japanese Nikkei 225 plunged 2.4% to 12339 and the Chinese Hang Seng slipped 0.5% to 22115. 

 

Follow Adam Samson on Twitter @adamsamson

Follow Adam Samson on Twitter @adamsamson.