U.S. stocks rose more than 3 percent on Tuesday to snap back from 12-year lows, after Federal Reserve Chairman Ben Bernanke delivered a big dose of relief when he signaled that nationalization of big banks was not at hand. Bernanke said the significant value built up in the country's banks would be lost if they were government-owned, easing investor fears that shareholders would be wiped out if the banks were taken over. In testimony to the U.S. Senate Banking Committee, Bernanke added that although there could be a time when it is necessary to close banks down, now is not the time. For more see [ID:nWAT011033]. Bank stocks surged a day after reports that the United States was on the brink of taking a large common stock stake in Citigroup Inc (C.N). Citigroup on Tuesday jumped 21.5 percent to $2.60. Bank of America (BAC.N) climbed 21 percent to $4.73 and the S&P Financial index .GSPF surged 11.4 percent. "Bernanke's comments lifted spirits," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York. "A real fear that investors have had is that the public sector has become far too involved in the private sector." The Dow Jones industrial average .DJI rose 235.76 points, or 3.31 percent, to 7,350.54. The Standard & Poor's 500 Index .SPX gained 29.69 points, or 3.99 percent, to 773.02. The Nasdaq Composite Index .IXIC added 54.11 points, or 3.90 percent, to 1,441.83. The Dow had its biggest point and percentage gain on Tuesday since Jan. 21 but remains down 8.1 percent for the month and 16.2 percent year-to-date. The gains snapped a six-day losing streak for the S&P 500. Concern about the future of the U.S. banking system had dragged the Dow and the S&P 500 to 1997 lows on Monday. Stocks rose across all sectors on Tuesday, with Microsoft (MSFT.O) the only decliner among the 30 components of the Dow industrials. Shares of Home Depot (HD.N) rose over 10 percent to $20.67, after the leading home improvement chain's quarterly operating profit topped estimates.

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