Wall St rallies on G20, accounting-rule changes

• Thursday April 2, 2009, 1:14 pm EDT

By Rodrigo Campos

Reuters - A trader works on the floor of the New York Stock Exchange March 30, 2009. REUTERS/Shannon Stapleton ...

Related Quotes

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7.18	+0.13
2.71	+0.03
31.35	+2.36

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NEW YORK (Reuters) - U.S. stocks jumped 4 percent on Thursday after world leaders agreed to pump an additional trillion dollars into the economy to fight the financial crisis and on rule changes aimed at giving banks flexibility when dealing with toxic assets.

Leaders of the G20 announced an additional $500 billion for the International Monetary Fund, plus $250 billion in IMF Special Drawing Rights and $250 billion to boost trade, to fight the worst economic crisis since the 1930s.

Adding to the positive tone, shares of large manufacturers such as Caterpillar Inc (NYSE:CAT - News) rose on hopes the economy may be stabilizing. Government data showed U.S. factory orders rose in February for the first time in seven months.

Financial shares, a key driver of the recent rally, surged on bets for an improving global economy and relaxation of accounting rules that have resulted in sharp hits to their balance sheets.

Shares of Bank of America (NYSE:BAC - News) climbed 4.3 percent to $7.35 while Citigroup (NYSE:C - News) rose 1.9 percent to $2.73. The KBW Bank index (Philadelphia:^BKX - News) advanced 2.5 percent.

"Simply put," the accounting rule change "has the potential to take some of the volatility out of the financial services' income statements," said Craig Peckham, equity trading strategist at Jefferies & Company in New York.

"That has been one of the elements that's made it hard to own financials over the last year."