Oil jumped more than $1 to above $53 a barrel Monday, supported by a rise in the stock market after strong housing data and on details of a U.S. plan to remove toxic assets from bank balance sheets.

The U.S. government fleshed out the plan Monday which it hopes can purge banks of up to $1 trillion in toxic assets, a key element of its drive to pull the world's biggest economy out of a deep recession.

U.S. stocks extended gains Monday, sending the benchmark S&P 500 up more than 3 percent, following a report that showed sales of existing homes rebounded in February.

The rise in the stock market points to improved demand, said Christopher Bellew, oil broker at Bache Commodities in London, adding: OPEC production cuts are biting. Also funds have been adding to their length.

U.S. crude rose $1.70 to $53.77 a barrel by 10:39 a.m EDT having earlier climbed to $53.85, its highest price since December 1. London Brent crude rose $2.00 to $53.22.

(Reporting by Alex Lawler and Christopher Johnson in London and Fayen Wong in Perth; editing by James Jukwey)