* Financials rise on hopes of more government aid
* Strength in banks offsets bleak economic reports
* Dow, S&P 500 up 1.5 pct; Nasdaq up 0.8 pct
* For up-to-the-minute market news, click []
(Updates to late morning)
By Edward Krudy
NEW YORK, Feb 26 (Reuters) - U.S. stocks rose on Thursday
as news that the Obama administration may seek more money to
shore up the ailing financial sector added to optimism that the
government would not nationalize major banks.
Obama's budget proposal, unveiled on Thursday, pencils in
the possibility he may request an additional $250 billion to
help fix the trouble U.S. financial system.
Optimism about financials overshadowed grim data showing
weakness in labor and manufacturing. The number of U.S. workers
continuing to receive state jobless aid jumped to a record high
in the latest week while new orders for long-lasting
manufactured goods fell to a 6-year low in January.
However, in a report showing sales of new single-family
homes slumped to a record low last month, the prior month's
drop was pared back, providing some relief to investors.
For full story on today's U.S. data see [].
The Dow Jones industrial average <> gained 106.57
points, or 1.47 percent, to 7,377.46. The Standard & Poor's 500
Index <.SPX> shot up 11.67 points, or 1.53 percent, to 776.57.
The Nasdaq Composite Index <> added 11.91 points, or 0.84
percent, to 1,437.34.
"It's not so much the economic numbers affecting the stock
market," said Cary Leahey, economist at Decision Economics in
New York, adding:
"Now it's any expectation that the banks will survive
better than expected and the fact that the administration
delivered just what the market wanted, which was government
help, but not overt nationalization. That seems to be the magic
wand for the stock market at the moment."
Citigroup <C.N> rose 7 percent to $2.70, while Bank of
America <BAC.N> gained more than 13 percent to $5.84 and shares
of JPMorgan <JPM.N> climbed 10.7 percent to $24.05.
The S&P financial index <.GSPF> rose 6.6 percent.
Federal Reserve Chairman Ben Bernanke on Wednesday had
reinforced the administration's pledge that a bank rescue would
not involve taking over major banks.
A jump in energy shares also underpinned the market as oil
prices headed higher. Front-month U.S. crude <CLc1> rose 6
percent to more than $45 a barrel in New York.
Shares of Exxon Mobil <XOM.N> rose 1.6 percent $73.20 while
Chevron <CVX.N> was up 2 percent at $64.75.
In corporate news, top technology services company
International Business Machines Corp <IBM.N> affirmed its
full-year earnings outlook and said results in January signaled
growth in services contract signings in the first quarter.
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IBM shares jumped 4.5 percent to $89.77 on the New York
Stock Exchange. Shares of other technology bellwethers
advanced, with Apple Inc <AAPL.O> up 1.6 percent at $92.60.
(Additional reporting by Ellen Freilich; Editing by James
Dalgleish)
