North American markets surge, cheered by news from Fed

A few reassuring words from the U.S. Federal Reserve chairman was all it took to get the stock markets rising again on Tuesday.

But what reassuring words they were:Ben Bernanke suggested the nationalization of big banks was not at hand.

Concern about that very thing had dragged the Dow and the S&P 500 to 1997 lows on Monday.

Bernanke said the significant financial value built up in the country's banks would be lost if they were government-owned. Not only that, he said the recession may not last a lot longer.

"If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability and only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," he said.

Bank stocks surged.

Citigroup jumped 21.5 per cent , Bank of America climbed 21 per cent, and the S&P Financial index surged 11.4 per cent. The Dow Jones industrial average rose 235.76 points, to 7,350.54.

In Canada, a day after falling 302 points to levels not seen since 2003, Toronto's S&P/TSX composite index surged 211.66 points to close at 7,859.33.

The Canadian dollar rose 0.51 of a cent to 80.43 cents US.