Reuters Wall Street soars 7 percent on bank plan debut

NEW YORK (Reuters) - Stocks surged around 7 percent on Monday after the Obama administration detailed a plan to purge toxic assets from bank balance sheets, fueling optimism about a revival in bank lending and driving double-digit gains in financial shares.

The S&P 500 and the Dow industrials posted their biggest one-day percentage gains since late October after Wall Street finally got what it was asking for: relief for the battered banking sector and more data suggesting the housing market could be on the mend.

The success of Treasury's plan hinges on private investment, so markets were encouraged when several large investors, including Bill Gross of top bond fund Pimco, said they would participate in what has become a key part of the government's efforts to unlock credit markets and revitalize the recession-hit economy.

The KBW Bank index posted its best one-day gain since at least 1993, driven higher by a 26 percent gain in Bank of America Corp, a 25 percent advance in JPMorgan Chase & Co and a 20 percent gain in Citigroup Inc.

"Even for a bear market rally this is explosive, and frankly it's jaw-dropping. This was a massive move that had three legs," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

Kenny cited three big factors driving the rally: the bank plan, its "benediction" by Pimco's Gross and traders reversing bets that stock prices would fall. more...