US STOCKS-Wall Street jumps as Europe debt concerns ease

* Yahoo CEO abruptly fired, shares up

* Financials, energy shares among day's top gainers

* Darden Restaurants falls on downbeat forecast

* Indexes up: Dow 2.2 pct, S&P 2.7 pct, Nasdaq 2.8 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to late afternoon)

By Edward Krudy

NEW YORK, Sept 7 (Reuters) - U.S. stocks rallied on Wednesday, reversing three days of losses after Germany's top court smoothed the way for Berlin's participation in bailout packages that could ease Europe's debt crisis.

Financial stocks rebounded sharply, almost a mirror image of the previous session. The KBW Bank Index <.BKX> rose nearly 6 percent, while Bank of America Corp shares jumped nearly 7 percent, helped also by a management shake up at the lender.

European stocks bounced back from a two-year low after the German court rejected lawsuits aimed at blocking the country from joining efforts to aid Greece and other nations. Germany's DAX <.DAX> index leapt more than 4 percent.

Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey, cautioned that although valuations are more attractive after the 12 percent decline in the S&P 500 Index since April, Wall Street's roller coaster ride was far from over.

"This is just another step in a long road," he said. "We'd really like to see some improvement in some of the data, and we're just not there yet."

The Dow Jones industrial average <.DJI> rose 247.07 points, or 2.22 percent, at 11,386.37. The S&P 500 <.SPX> added 31.08 points, or 2.67 percent, at 1,196.32. The Nasdaq Composite Index <.IXIC> gained 68.98 points, or 2.79 percent, at 2,542.81.

Yahoo Inc shares gained 4.6 percent to $13.50 after its chairman, Roy Bostock, abruptly fired Chief Executive Carol Bartz on Tuesday, ending a tumultuous tenure marked by stagnation and a rift with Chinese partner Alibaba. [ID:nN1E785210]

Bank of America rose 6.9 percent to $7.47 and was the top percentage gainer on the Dow after the heads of its consumer banking and global wealth and investment management units left. Bank of America has lost almost half of its market value this year. [ID:nN1E7851WE]

"The financials have been pounded mercilessly, and we're starting to get a real bid under their valuation," said Howard Ward, chief investment officer at GAMCO Growth in Rye, New York. "That's a huge positive."

Shares of energy companies, another sector closely tied to economic growth, were also higher. The S&P energy index <.GSPE> rose 3.1 percent while the price of U.S crude oil rose 3.6 percent to $89.10 a barrel.

The CBOE Volatility index <.VIX> fell 9.1 percent after spiking 9 percent on Tuesday. The index usually moves inversely to the S&P 500.

Darden Restaurants Inc was the biggest loser on the S&P, falling 3.6 percent to $44.51 a day after the operator of the Red Lobster and Olive Garden restaurant chains warned that Hurricane Irene hurt its fiscal first-quarter earnings. [ID:nN1E7851Q5]

Nvidia Corp climbed 9.9 percent to $14.48 a day after the chipmaker forecast 2013 sales that topped market expectations. [ID:nL3E7K63ZB]

About 87 percent of stocks traded on the New York Stock Exchange were in positive territory, while 83 percent of stocks on the Nasdaq rose. (Editing by Padraic Cassidy)