US STOCKS-Bank plan ignites optimism, Wall St surges 7 pct

                                
 * Financials surge on details of toxic asset plan
                                
 * Existing-home sales jump in February
                                
 * Dow up 6.8 pct, S&P 500 up 7.1 pct, Nasdaq up 6.8 pct
                                
 For up-to-the-minute market news, click [STXNEWS/US]
 (Updates to close)
                                
 By Edward Krudy
                                
 NEW YORK, March 23 (Reuters) - U.S. 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 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.
                                
 Banks were standouts in the broad-based rally, with
Citigroup <C.N> up 19.5 percent to $3.13 and Bank of America
<BAC.N> up 26 percent to $7.80. Both the KBW Bank Index <.BKX>
and the S&P financial sector index rallied nearly 20 percent,
though they remain down more than 23  percent year-to-date.
                                
 "The market breathed a sigh of relief that the plan is
friendly to private investment," said Angel Mata, managing
director of listed equity trading at Stifel Nicolaus Capital
Markets in Baltimore.
                                
 Removal of toxic assets from banks' balance sheets is seen
as a crucial step in allowing banks to make new loans. Big
investors that expressed interest on Monday in participating in
the government's plan included top bond fund Pimco and money
manager BlackRock.
                                
 The Dow Jones industrial average <.DJI> jumped 497.48
points, or 6.84 percent, to 7,775.86. The Standard & Poor's 500
Index <.SPX> surged 54.38 points, or 7.08 percent, to 822.92.
The Nasdaq Composite Index <.IXIC> added 98.50 points, or 6.76
percent, to 1,555.77.   
                                
 An unexpected rise in housing sales, seen as a key to an
economic recovery, also boosted sentiment. Data showed the pace
of sales of existing homes in the United States rose 5.1
percent in February, the biggest increase since July 2003.
                                
 The housing data helped the Dow Jones index of home
builders <.DJUSHB> rally nearly 15 percent, with shares of
Lennar <LEN.N> and Ryland Group <RYL.N> up 20.4 percent and
17.6 percent respectively.
                                
 Even with the run-up, other analysts said the market had
been due for a bounce given the damage incurred when stocks
slid to 12-year lows earlier this month.
                                
 The benchmark S&P 500 index is up more than 20 percent from
the bear market closing low set on March 9. The index on Monday
closed above 800 for the first time since Feb. 13.
                                
 The government's bank plan involves generous government
financing to woo big investors to buy up toxic assets.
                                
 The Treasury Department will kick off the financing for its
Public-Private Investment Program with $75 billion-$100 billion
that will come from the $700 billion financial bailout fund
approved by Congress last fall. For details, see
[ID:nSP429491].
                                
 Oil shares on Monday were buoyed by a large merger deal in
the energy sector and rising oil prices. Exxon Mobil <XOM.N>
jumped 6.7 percent at $70.53 and Chevron <CVX.N> gained 6.9
percent to $69.15.
                                
 Canada's No. 2 oil company, Suncor Energy <SU.TO>, agreed
to buy rival Petro-Canada <PCA.TO> for about $14.9 billion to
create Canada's largest oil company. [ID:nN22497404].
Meanwhile, U.S. crude futures <CLc1> rose 3.3 percent or $1.73
to $53.80 a barrel.
                                
 On the earnings front, upscale jeweler Tiffany & Co <TIF.N>
jumped about 15.5 percent to $23.37 after reporting quarterly
profit that beat expectations. [ID:nN23532555]
                                
 The S&P Retail index <.RLX> rose nearly 6.42 percent.
                                
 And shares of Walgreen Co <WAG.N> rose 9.4 percent to
$26.58 after the drugstore chain posted better-than-expected
profit[ID:nN23209772].
                                
 Trading was active on the New York Stock Exchange, with
about 1.91 billion shares changing hands, above last year's
estimated daily average of 1.49 billion, while on Nasdaq, about
2.24 billion shares traded, below last year's daily average of
2.28 billion.
                                
 Advancing stocks outnumbered declining ones on the NYSE by
2863 to 259 while advancers beat decliners on the Nasdaq by
about 2262 to 429.
 (Additional reporting by Charles Mikolajczak, Editing by
Leslie Adler)