Sector Snap: Regional bank stocks rally

On Tuesday, President Bush announced a $250 billion plan to directly buy shares in nine of the country's leading banks. The Federal Reserve, meanwhile, announced that it will begin buying massive amounts of short-term debt on Oct. 27 to help unfreeze the credit markets and encourage lending. The moves are the latest in a stream of unprecedented efforts by the government to restore stability to the financial markets and reassure investors.

Analysts generally viewed the government's efforts favorably, noting that regional banks stand to benefit directly.

Citi Investment Research analyst Keith Horowitz upgraded the shares of Comerica Inc. to "Buy" from "Sell." He also raised the ratings on First Horizon National Corp., Fifth Third Bancorp, KeyCorp and M&T Bank Corp. to "Buy" from "Hold."

Additionally, Horowitz upgraded U.S. Bancorp to "Hold" from "Sell."

"With this new plan, capital will be more readily available than we originally expected and at a significantly lower cost," Horowitz said.

First Horizon shares rallied $1.97, or 21 percent, to $11.17 in late morning trading. Shares have traded between $4.38 and $25.67 in the past 12 months.

Comerica added $2.15, or 8.7 percent, to $26.80, while Fifth Third gained $1.78, or 16 percent, to $12.65.

KeyCorp rose $2.25, or 29 percent, to $10.01.

M&T Bank jumped $5.11, or 7.3 percent, to $74.71.