Plan to tackle the Euro-zone debt crisis will be presented Sunday

Here is Market Watch Friday morning:

By Polya Lesova, MarketWatch

LONDON (MarketWatch) — European stocks rose early Friday, with banks recovering from the previous session’s steep losses, buoyed by hopes that a plan to tackle the euro-zone debt crisis will be presented soon.

The pan-European Stoxx 600 index XX:SXXP +0.68%  rose 0.8% to 234.9 in mid-morning trading.

Among banks, UniCredit SpA IT:UCG +3.13%  rallied 5% in Milan, BNP Paribas SAFR:BNP +3.01%  rose 2.9% in Paris and Commerzbank AG DE:CBK +2.06%  climbed 3.2% in Frankfurt.

Stocks have been on a wild ride this week as optimism over a possible solution to the debt crisis receded and mounted on various media reports.

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Merkel races to put EU deal together

Matthew Karnitschnig joins Mean Street to discuss German Chancellor Angela Merkel's efforts to broker an agreement among EU leaders over plans to tackle the euro-zone debt crisis.

European markets closed sharply lower Thursday following reports that the European Union summit set for Sunday may be delayed — reports which were subsequently denied. Sentiment was buoyed Friday after French President Nicolas Sarkozy and German Chancellor Angela Merkel issued a joint statement late Thursday saying they will meet Saturday night in Brussels to prepare for the Sunday summit of European leaders. They said they planned to provide a response to the debt crisis, but warned that an agreement may not be reached on Sunday but rather at a second summit to be held no later than Wednesday.

“Upcoming policy news flow should hopefully provide some welcome clarity on the medium-term outlook for European stocks,” Morgan Stanley strategists wrote in a note. “With uncertainty high, we suspect positioning will be neutral into this weekend.”