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Sector Snap: Bank stocks up on debt sale, earnings

NEW YORK (AP) -- A batch of better profit reports and a successful sale of government debt by Spain helped pull bank stocks up along with the broader market.

Regional bank Comerica's stock jumped nearly 4 percent, one of the best gains in the Standard & Poor's 500 index. Comerica said Tuesday that its quarterly profits rose 27 percent, beating Wall Street analysts' estimates.

Citigroup gained 3.7 percent as analysts increased their earnings forecasts a day after the country's second-largest bank reported earnings above expectations.

Banks and other large bond investors bought more short-term debt from the Spanish government than was expected on Tuesday. Following the debt auction, yields on Spanish government bonds fell and stock markets in Europe and the U.S. rallied.

Spanish government borrowing costs, known as yields, had been rising as bond traders began to speculate that the country would struggle to repay its debts. Spain's economy has been shrinking and nearly a quarter of its workforce is unemployed.

Shares of Bank of America and Morgan Stanley surged a day before their earnings reports. Bank of America, the country's second-largest bank, rose 1.5 percent. Investment bank Morgan Stanley gained 2 percent.

U.S. Bancorp said its first-quarter profit jumped 28 percent, as the bank got an income boost from both loans and fees. That beat analysts' expectations but only by 3 cents a share. U.S. Bancorp's stock was up 1.3 percent in afternoon trading.

Goldman Sachs reported that its net income available to common shareholders rose to $2.1 billion, more than doubling from the first quarter of last year. It plans to increase its quarterly dividend from 35 cents a share to 46 cents. Revenue fell 16 percent compared with the year before, as the bank pulled in fewer fees for underwriting stock and bond sales.

Goldman's stock was down about 1 percent. But it's still up 28 percent for the year.

Financial stocks rose amid a broad market rally that sent both the S&P 500 and the Dow Jones industrial average up 1.5 percent. The Nasdaq gained 2 percent in afternoon trading.