GLOBAL MARKETS-U.S. stocks rally on Bernanke comments, oil jumps

                                
 * US stocks jump on Bernanke pledge to ensure bank health
                                
 * Oil rises on stock rally, OPEC cuts seen taking hold
                                
 * Government debt sags as stock dim allure of safe havens
                                
 * U.S. dollar gains versus yen on bid for safe haven
 (Updates with close of U.S. markets)
                                
 By Herbert Lash
                                
 NEW YORK, Feb 24 (Reuters) - U.S. stocks jumped on Tuesday,
a day after sliding to a 12-year low, and the appeal of
safe-haven assets waned after Federal Reserve Chairman Ben
Bernanke signaled the nationalization of major banks was not
planned.
                                
 Bernanke expressed faith that the banking system could be
stabilized and that authorities were on the right path in
taking time to fully diagnose the health of top U.S. banks. For
details, see [ID:nN24405808].
                                
 "If I thought the banks were irrevocably damaged, I would
have a different view, but I do believe our major banks have
significant franchise values," Bernanke said in testimony
before the Senate Banking Committee in Washington.
                                
 The heavily battered S&P 500 financial index <.GSPF> surged
almost 12 percent and bonds slipped as the stock surge took the
gleam off the risk-averse allure of government debt.
[ID:nN24423456]
                                
 Oil prices rose 4 percent, tracking Wall Street's bounce
[ID:nSIN379847]. U.S. gold futures fell 2.6 percent on
options-related selling and profit taking triggered by
Bernanke's comments that inflation pressures had receded.
[ID:nN24530272]
                                
 Widespread doubt about government plans for U.S. banks had
dragged the Dow and the S&P 500 to 1997 lows on Monday. The S&P
500 recouped the previous day's losses, but not the Dow.
                                
 The Dow Jones industrial average <.DJI> closed up 236.16
points, or 3.32 percent, at 7,350.94. The Standard & Poor's 500
Index <.SPX> rose 29.81 points, or 4.01 percent, to 773.14. The
Nasdaq Composite Index <.IXIC> added 54.11 points, or 3.90
percent, to 1,441.83.
                                
 European stocks fell for a third straight session as fears
persisted about the health of banking stocks and the severity
of the U.S. recession after more dismal economic data.
                                
 The FTSEurofirst 300  index <.FTEU3> of top European shares
fell 1.4 percent to end at 719.38 points, its lowest close
since March 2003.
                                
 The broad STOXX 600 index fell <.STOXX> 1.4 percent to
172.86 points, led lower by drug stocks.
                                
 "The markets are disenchanted by the policy-makers'
attempts to stabilize the financial system," said Mike Lenhoff,
chief strategist and head of research at Brewin Dolphin
Securities in London.
                                
 While Bernanke's comments sparked the U.S. stock rally, he
warned that government failure to restore financial stability
could extend the U.S. recession into 2010, which helped to
strengthen the U.S. dollar. [ID:nN24571602]
                                
 Bernanke also said the shrinking U.S. economy was at
further risk from a self-reinforcing cycle of weak growth and
financial market strain.
                                
 Against the yen, the dollar <JPY=> was up 2.5 percent at
96.81, from a previous session close of 94.470.
                                
 The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.36 percent at 86.95.
                                
 The euro <EUR=> rose 1.06 percent to $1.2841.
                                
 Economic reports showed U.S. home prices plunged at a
record pace in December and consumer confidence hit a new low
in February. [ID:nN24530580] That news checked losses in the
bond market.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
12/32 in price to yield 2.80 percent, and the two-year U.S.
Treasury note <US2YT=RR> fell 3/32 in price to yield 0.99
percent.
                                
 Oil rose on the stock rally and figures showing
higher-than-expected compliance by the Organization of
Petroleum Exporting Countries with its agreed production cuts.
                                
 A Reuters calculation based on the consultant's figure
showed OPEC delivered on 89 percent of the agreed supply
cutbacks promised since last year. [ID:nLN481500]
                                
 U.S. crude oil <CLc1> rose $1.52 to settle at $39.96 a
barrel while London Brent crude <LCOc1> rose $1.51 to $42.50.
                                
 Gold for April delivery <GCJ9> settled down $25.50 at
$969.50 an ounce in New York.
 (Reporting by Richard Valdmanis, John Parry, Rodrigo Campos,
Vivianne Rodrigues and Frank Tang in New York and Emelia
Sithole-Matarise, Brian Gorman and Ikuko Kao in London; writing
by Herbert Lash; Editing by Jonathan Oatis)