RTRS; US STOCKS-Wall St soars 7 pct on bank plan debut
* Financials surge on details of toxic asset plan
* Big investors' endorsement of plan adds to rally
* Existing-home sales jump in February
* Dow up 6.8 pct, S&P 500 up 7.1 pct, Nasdaq up 6.8 pct
For up-to-the-minute market news, click [STXNEWS/US] (Adds quote, context on Dow and Bill Gross endorsement)
By Edward Krudy
NEW YORK, March 23 (Reuters) - U.S. stocks surged around 7 percent on Monday after the Obama administration detailed a plan to purge toxic assets from bank balance sheets, fueling optimism about a revival in bank lending and driving double-digit gains in financial shares.
The S&P 500 and the Dow industrials posted their biggest one-day percentage gains since late October after Wall Street finally got what it was asking for: relief for the battered banking sector and more data suggesting the housing market could be on the mend.
The success of Treasury's plan hinges on private investment, so markets were encouraged when several large investors, including Bill Gross of top bond fund Pimco, said they would participate in what has become a key part of the government's efforts to unlock credit markets and revitalize the recession-hit economy.
The KBW Bank index .BKX posted its best one-day gain since at least 1993, driven higher by a 26 percent gain in Bank of America Corp (BAC.N), a 25 percent advance in JPMorgan Chase & Co (JPM.N) and a 20 percent gain in Citigroup Inc (C.N).
"Even for a bear market rally this is explosive, and frankly it's jaw-dropping. This was a massive move that had three legs," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
Kenny cited three big factors driving the rally: the bank plan, its "benediction" by Pimco's Gross and traders reversing bets that stock prices would fall.
The Dow Jones industrial average .DJI jumped 497.48 points, or 6.84 percent, to 7,775.86 and the Standard & Poor's 500 Index .SPX surged 54.38 points, or 7.08 percent, to 822.92. The Nasdaq Composite Index .IXIC spiked 98.50 points, or 6.76 percent, to 1,555.77.
The market capitalization of the Dow rose $167.4 billion, and the index is now up more than 10 percent on the month, nearly erasing a 12 percent fall in February.
While the removal of toxic assets from banks' balance sheets is seen as a crucial step in allowing banks to make new loans, it will also help bank shares, which are still down 30 percent year to date.
An unexpected rise in housing sales, seen as a key factor in spurring an economic recovery, also boosted sentiment. Data showed the pace of sales of existing homes in the United States rose 5.1 percent in February, the biggest increase since July 2003.
