* Banks up after Europe news, Goldman Sachs upgrade
* Home builders gain after pending home sales data
* Dow up 0.9 pct, S&P up 1.1 pct, Nasdaq up 1 pct (Updates to midday; changes byline)
By Angela Moon
NEW YORK, Dec 2 (Reuters) - Wall Street rose on Thursday, led by banks and home builders after European lenders decided to continue a liquidity safety net for vulnerable banks and pending home sales data showed an unexpected jump in October.
The KBW bank index shot up 2.9 percent, the biggest one-day gain in a month. The S&P 500 financial index rose 2.2 percent, making it the largest gainer among S&P sectors.
The stock market was reassured by the European Central Bank's commitment that its liquidity safety net for vulnerable euro-zone banks will continue.
Officials have "basically said we will do what it takes and while you can never know what a Band-Aid will look like at any point in time, I think the overall theme is that those Band-Aids will be found," said Bob Doll, chief equity strategist for fundamental equities at BlackRock Inc.
Further supporing the financials, Goldman Sachs Group Inc
Shares of regional lender Marshall & Ilsley Corp jumped 7.2 percent to $5.23 and Bank of America gained 2.7 percent to $11.59.
Home builders' stocks also rose as an index of pending home sales unexpectedly surged in October, hinting the economic recovery has legs. The Dow Jones U.S. Home Construction index advanced 4.3 percent.
The Dow Jones industrial average rose 102.74 points, or 0.91 percent, to 11,358.52. The Standard & Poor's 500 Index advanced 13.29 points, or 1.10 percent, to 1,219.36. The Nasdaq Composite Index gained 24.28 points, or 0.95 percent, to 2,573.71.
Other data showed U.S. retailers reported higher-than-forecast sales for November, while the four-week moving average for jobless claims fell to a fresh two-year low, though new claims rose for the week.
The Dow and the S&P 500 scored their biggest one-day percentage gains in three months on Wednesday as optimism about efforts to resolve the EU's debt crisis helped push the S&P above 1,200.
If the S&P 500 continues to hold above that level, the market uptrend will see strong resistance at 1,225-1,230, which coincides with a recent two-year high and the 61.8 percent Fibonacci retracement of the benchmark's slide from October 2007 to March 2009, a key technical indicator.
In company news, PepsiCo Inc agreed to buy Russian juice and dairy producer Wimm-Bill-Dann. U.S.-traded shares of Wimm-Bill-Dann surged 27.3 percent to $31.15. In contrast, PepsiCo's stock lost 0.9 percent to $65.03. (Reporting by Angela Moon; Additional reporting by Ed Krudy; Editing by Jan Paschal)