The broad indexes rebounded following comments from Federal Reserve Chairman Ben Bernanke to the Joint Economic Committee of the U.S. Congress, in which the Fed Chairman expressed confidence that "European leaders are strongly committed to addressing" the sovereign debt crisis within the Eurozone. Investors also cheered the news that executives of Deixa SA were discussing a possible "good bank/bad bank" breakup plan for the company, with French and Belgian officials.
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The KBW Bank Index (I:BKX) climbed 4.5% to close at $35.17, with all 24 index components showing gains for the session, except for First Niagara Financial Group, which was down 3% to close at $8.66.
Shares of First Niagara have decline 41% since they closed at $12.25 on July 29, which was the last trading session before the Buffalo, N.Y. lender announced its $1 billion deal to acquire 195 branches from HSBC (HBC). The deal is expected to be completed early next year, with First Niagara issuing between $750 and $800 million in new common shares. Of course, as the shares decline, First Niagara's shareholders face a significant increase in the dilution of their stakes from the planned offering.
Shares of Fifth Third Bancorp (FITB) rose 9% to close at $10.64.
Zions Bancorporation (ZION) was up 8% to close at $14.74.
Large U.S. banks seeing shares rise 6% Tuesday included Bank of New York Mellon (BK), closing at $18.82; Citigroup (C), at $24.39; Commerce Bancshares (CBSH), at $35.79; Cullen/Frost Bankers (CFR), at $49.96; Comerica (CMA), at $23.51; JPMorgan Chase (JPM), at $30.26; Northern Trust (NTRS), at $36.02; Regions Financial (RF), at $3.19; and State Street (STT), which closed at $32.06.
Huntington Bancshares (HBAN) was up 5% to close at $4.91.
Shares of Bank of America (BAC) rose 4% to close at $5.76, after announcing plans to shutter its correspondent mortgage business, after failing to sell the unit.
Bank of America was among five holding companies for which Wells Fargo significantly cut earnings estimates on Tuesday.
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