Updated from 12:15 p.m. EDT

Financial stocks leapt higher than the broader market Friday, propelled in part by the Chicago Mercantile Exchange ( CME) and Chicago Board of Trade ( BOT).

Both commodities exchanges climbed after CME sweetened its bid for CBOT, agreeing to pay 16% more in stock than that agreed upon in October and to repurchase up to about 12% of the new company's shares for $560 apiece after the deal closes. Current CBOT holders will also own 34.6% of the new company vs. the prior 31.2%.

The CBOT's board moreover said IntercontinentalExchange's ( ICE) all-stock rival bid, launched in March, was "not superior" to the CME's revised offer. CME was up 7.7% to $536.30, and CBOT added 3.8% to $201.35. ICE lately rose 4.2% to $140.55.

The NYSE Financial Sector Index, of which all three exchanges are components, surged 126.95 points, or 1.3%, to 9894.82. The KBW Bank Index, which only tracks large banks, was more in line with the rest of the market, adding 0.6% to 117.15.

Meanwhile, shares of NovaStar Financial ( NFI) spiked 8.2% to $7 after the Missouri-based subprime-mortgage lender reported that first-quarter earnings rose sharply from last year to $44.4 million, or $1.18 a share, compared with 69 cents last year. The climb was largely due to NovaStar's plan to end its status as a real estate investment trust as of Jan. 1, 2008, which brought in a one-time tax-related gain of $84.2 million.

Net 1 UEPS Technologies ( UEPS), a South Africa-based payment processor, jumped 8.9% to $26.97 on fiscal third-quarter income of 32 cents a share, which is a penny higher than two analysts' estimates from Thomson Financial.

Elsewhere, insurance behemoth American International Group ( AIG), based in New York, posted adjusted first-quarter income of $4.4 billion, or $1.68 a share. This is 39 cents a share higher than last year and beats Street targets by 14 cents. Shares tacked on 0.5% to $72.58.

Among the multitudes of rising financial stocks today, Signature Bank ( SBNY) was up 5.3% to $33.90; mortgage lender Countrywide Financial ( CFC) added 2.8% to $41.08; and broker Merrill Lynch ( MER) gained 2.7% to $93.51.

Arthur J. Gallagher ( AJG) was among the few financial losers today, slipping 3 cents to $28.56 after Thursday's just-before-close announcement that it bought fellow Illinois-based insurance broker Tropp & Co. for an undisclosed sum.

Joining AJG on the lonely losing side today were Ladenburg Thalmann Financial ( LTS), losing 1.5% to $2.60; online broker TD Ameritrade ( AMTD), off 1% to $17.96; and insurance broker Marsh & McLennan ( MMC), recently giving up 1% at $30.86.

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