Battered bank stocks rebound

Banks stocks, badly beaten down by fears of a double-dip recession, worries about continued mortgage losses and the debt crises in Europe and the United States, rose sharply higher Tuesday as investors decided a buying opportunity was at hand.

The BKX index of 24 diverse bank stocks was up more than 7%, with some of the largest and most hammered banks significantly higher.

Retail giant Bank of America Corp., which has been hit particularly hard by fears that it can't get a handle on its mortgage troubles, was up $1.09, or 16.7%, at $7.60. The stock had plunged by 20% on Monday in the highly volatile market.

Wells Fargo & Co., also highly exposed to consumer lending, rose $1.85, or 8.1%, to $24.78. Citigroup Inc., which has huge exposure to foreign markets, jumped $3.87 to $31.82, a 13.8% gain, as Chief Executive Vikram Pandit said his bank, extensively restructured after the financial crisis, has "unparalleled resources" to withstand the current storms.

Shares of JPMorgan Chase & Co., regarded as among the strongest banks, rose $2.34, or 6.9%, to $36.40.

The bank stocks jumped early in the day but backed off after Standard & Poors, which helped trigger a market sell-off four days earlier by downgrading the long-term credit rating of U.S. Treasury debt, expressed concerns that bank profits will be depressed by the slow economy, sovereign debt problems and the continuing mortgage and housing fiasco.

The bank shares then resumed their climb after the Federal Reserve, expressing concerns about the weakening economy, said it probably would hold its benchmark interest rate near zero for another two years.