Stocks in the United States rose by more than 3% on Tuesday after Federal Reserve Chairman Ben Bernanke signaled that nationalization of big banks was not at hand.
Dr Bernanke told the Senate Banking Committee that the value built up in the banks would be lost if they were government-owned, easing investor fears that shareholders would be wiped out if the banks were taken over.
He added that although there could be a time when it is necessary to close banks down, now is not the time.
Bank stocks surged: Citigroup rose 21.5% to $2.60 and Bank of America rose 21% to $US4.73.
The Dow Jones industrial average rose 235.76 points, or 3.31%, to 7,350.54.
Standard & Poor's 500 Index gained 29.69 points, or 3.99%, to 773.02. The Nasdaq Composite Index added 54.11 points, or 3.9%, to 1,441.83.
Concern about the future of the US banking system dragged the Dow and the S&P 500 to 1997 lows on Monday.
Despite Tuesday's advance, US stocks are at about half their market value from peaks reached in October 2007.
Trading was active on the New York Stock Exchange, with about 1.8 billion shares changing hands - above last year's estimated daily average of 1.49 billion.
About 2.35 billion shares were traded on the Nasdaq - above last year's daily average of 2.28 billion.