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) --


(C) - Get Citigroup Inc. Report

gained the most among the largest U.S. financial names on Tuesday, posting a 1.67% gain that lifted shares to $33.48.

Bank stocks -- while in the spotlight because of a

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

investor day and improving prospects of a $8.5 billion mortgage settlement for

Bank of America

(BAC) - Get Bank of America Corp Report

-- took second billing to the

Dow Jones Industrial Average

, which above 13,000 for the first time since May 2008.

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was up less than 1% to close at $45.56, beating broad market gains at the Dow,

S&P 500




Citigroup's shares are now up over 27% year-to-date on following a 44% drop in 2011. The bank was boosted by news from the

Federal Deposit Insurance Corporation

that bank earnings rose to $119.5 billion for 2011, a 40% from the previous year and the most since 2006. Banks like Citigroup with assets of $10 billion or more accounted for 83% of total bank earnings, said the FDIC.

Meanwhile, Bank of America gained 1% to $8.12, adding to a near 50% year-to-date share rally, after a 58% 2011 fall. The bank was boosted by signs that it may close a $8.5 billion settlement on residential mortgage related securities issued by its

Countrywide Financial

division, which it acquired in 2008. An investor lawsuit contesting the settlement has been New York state courts, potentially paving the way for it and other banks mortgage-related lawsuits, with other large players like Citigroup and JPMorgan benefitting.

In late day news, Wells Fargo revealed that it has received a Wells Notice from the

Securities and Exchange Commission

, which indicates that the biggest home lender in the U.S. may face civil claims on its sale of mortgage-backed securities. The disclosure was made in Wells Fargo's annual report.

JPMorgan rose 0.4% to $39.21 as it hosted an investor day conference just a day after CLSA analyst Mike Mayo said the bank should split itself to realize the full value of its businesses. The nation's largest bank also received weekend press, when Warren Buffett said that investors should focus JPMorgan's share buyback plans.

In the investor day, the head of JPMorgan's investment bank Jes Staley disclosed that the bank's trading division made $375 million in quarterly revenue from credit trading in 2011, the strongest trading category of the bank, followed by interest rate swaps, where it brought in $350 million in revenue per quarter.

Shares of

Morgan Stanley

(MS) - Get Morgan Stanley Report

fell 0.2% to $18.71, after it disclosed in its 10-K filing that a three notch ratings downgrade from Moody's Investor Service would cost over $5 billion in swap termination and collateral payments to trading counterpartys and exchanges. The investment bank is currently facing a "ratings review" for the downgrade by Moody's, which could prove to be costly.

After opening lower, financials and the Dow Jones Industrial Average rallied on a stronger than expected reading of consumer confidence from the Conference Board. February numbers showed a reading of 70.8, up from 61.5 in January, beating economist estimates.

That reading overshadowed a weaker than expected reading on home prices. The S&P/Case Shiller home price index reported that its 20-city home-price index saw a year-over-year 4% drop in December. Economists were looking for a 3.6% decline. A protracted drop in home prices would cut at bank earnings, according to many analysts

Late on Monday, ratings firm Standard & Poor's cut Greece's credit rating to "selective default." The move comes after reductions by Fitch Ratings last week and ahead of a Greek bond swap in which some private creditors may resist taking part in the exchange. Greece is now the first eurozone nation to be rated in default.

Interested in more Wells Fargo? See TheStreet Ratings' report card for this stock.


Citigroup's Chairman Needs to Go Now: Mayo

Here's 5 big questions for JPMorgan CEO Jamie Dimon

Florida banks are skipping a banking sector recovery

Banks earn a record $100 billion post crisis profit

Bank of America avoids a court win boost

Las Vegas home sales Rise in January

The Dow closes at 13,000 for the first time since May 2008.


Written by Antoine Gara in New York