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.

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