Banks lead stocks higher

US STOCKS closed higher yesterday for a second day in a row as late-day news about Europe sparked an afternoon rally that erased early weakness.

Italy’s president said Silvio Berlusconi, the country’s prime minister, would resign after a new budget law was approved. Equities had hoped for a resignation, which is seen as clearing the way for a leader who will act more aggressively to tackle the country’s debt problems. The PHLX Europe sector index, which includes major European shares, advanced 1.8 per cent.

All 10 S&P 500 sectors rose, but banks, which generally suffer whenever Europe fears surge, did particularly well. The S&P Financial Index was the top gainer, advancing 1.9 per cent. Wells Fargo & Co added 4.4 per cent to $26.53 and Citigroup Inc gained 2.9 per cent to $31.42.

The Dow Jones industrial average shot up 101.79 points, or 0.84 per cent, to 12,170.18. The Standard & Poor’s 500 Index gained 14.80 points, or 1.17 per cent, to 1,275.92. The Nasdaq Composite Index advanced 32.24 points, or 1.20 per cent, to 2,727.49.