Bond prices rallied and European bank stocks rose on Monday after Portugal devised a plan to prevent the collapse of one of its biggest lenders.

U.S. stocks edged up in early trade, with the S&P 500 coming off its worst week since 2012, as concerns over higher U.S. interest rates eased following Friday's U.S. employment report. Lisbon on Sunday announced a near 5 billion-euro ($6.6 billion US) rescue of the country's largest listed bank, Banco Espirito Santo, preventing it from collapsing and potentially destabilizing the regional banking sector.

"From a technical viewpoint, the market managed on Friday to hold the lower end of the trading range and the fact we did that is helping the market out this morning," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"News from Portugal certainly is a step in the right direction and after the sharp losses of last week, the market needs to catch its breath."

Portugal's 10-year yield fell to 3.575 per cent, down 7 basis points, as investors bought the bonds on relief after the package was announced. Other European bond markets also rallied, with yields on Spanish and Italian bonds moving lower .

The FTSEurofirst 300 index of leading shares was down 0.02 per cent, giving up early gains. Pan-European banking stocks were up 0.4 per cent, however. The MSCI All-World Index rose marginally, up 0.1 per cent. 

U.S. financial shares up

U.S. financial shares rose, lifted by a 1.4 per cent gain in Berkshire Hathaway after the company helmed by Warren Buffett said on Friday that second-quarter profit soared 41 per cent.

The Dow Jones industrial average was up 11.56 points, or 0.07 per cent, at 16,504.93. The Standard & Poor's 500 Index was up 3.66 points, or 0.19 per cent, at 1,928.81. The Nasdaq Composite Index was up 13.13 points, or 0.30 per cent, at 4,365.77.