Stocks on Monday were set to extend their recovery from 12-year lows reached earlier this month after Britain's Barclays became the latest bank to buoy hopes that some stabilization may be returning in banking.

Echoing comments made last week by the executives of major U.S. banks, Barclays said it had seen a strong start to 2009, fueling advances of 2 percent or more in European stock markets.

Stocks also rallied in Asia, with the Hang Seng Index <.HSI> jumping nearly 4 percent.

Shares of Citigroup rose nearly 8 percent before the bell to $1.92. The stock last traded above $2 on Feb 26 on an intraday basis. Shares of Bank of America jumped 8 percent to $6.22, while shares of JPMorgan climbed 3.2 percent to $24.50.

The news from Barclays is certainly helping. It's in addition to what we've heard from Bank of America, Citi and JPMorgan, said Art Hogan, chief market analyst at Jefferies & Co in Boston.

The rise in financials has given us a nice 10 percent move (from the lows) in the market. It's something we can build on even if it's a bear market bounce.

Barclays also confirmed it had discussed selling its iShares unit. And in other banking news, Europe's biggest bank HSBC said it had no need to raise more cash.

S&P 500 futures rose 8.40 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 64 points, and Nasdaq 100 futures jumped 7.50 points.

Also lending support to investor optimism was news from the weekend that the U.S. Treasury Department will announce more details this week on its proposal for having public-private partnerships take bad assets off banks' books.

But there was likely to be some caution after a report showed that a gauge of New York State manufacturing activity slumped to a record low in March as fallout from the recession worsened.

At Friday's close the benchmark S&P 500 <.SPX> marked its third best week since World War Two after rising for four straight days. On the week it gained 10.7 percent, but for the year so far, it is still off 16 percent.

In other news Federal Reserve Chairman Ben Bernanke, in a taped interview on Sunday, suggested the U.S. recession could last most of the year and said the biggest risk was that the political will needed to fix the fractured financial system could be lacking.

(Reporting by Ellis Mnyandu, Editing by Chizu Nomiyama)