May 8 (Bloomberg) -- Stocks rallied around the world as Federal Reserve Chairman Ben S. Bernanke said a review of banks’ health should provide “considerable comfort” and a report showing fewer job losses than forecast signaled the worst of the recession is over. Treasuries and oil gained. The dollar fell.

Citigroup Inc., Deutsche Bank AG and Mitsubishi UFJ Financial Group Inc. jumped at least 4.6 percent and Fifth Third Bancorp rallied 59 percent. The government said U.S. banks need to raise only $74.6 billion, which Bernanke said should reassure investors about the soundness of the financial system. Exxon Mobil Corp. and BP Plc led an advance in energy companies as the jobs report boosted expectations fuel demand will increase.

“Investors’ confidence seems to have returned,” said David Goerz, who oversees $17 billion as chief investment officer at Highmark Capital Management in San Francisco. “There’s relief from the results of the stress tests and interesting finds from the unemployment report.”

The Standard & Poor’s 500 Index climbed 2.4 percent to a four-month high of 929.23 at 4:06 p.m. in New York, capping its eighth weekly advance out of the past nine. The Dow Jones Industrial Average added 164.8 points, or 2 percent, to 8,574.65. Almost seven stocks gained for each that fell on the New York Stock Exchange.

The S&P 500, the benchmark index for U.S. shares, has rallied 33 percent since President Barack Obama said on March 3 that the market was likely a bargain for investors with a long- term perspective. The gauge added 5.9 percent this week, its best rally since the end of March, and extended its 2009 advance to 2.9 percent.

Global Rally

Treasuries climbed for the first time in four days after the Labor Department report showed the nation lost 539,000 jobs last month, less than the 600,000 estimated in a Bloomberg survey of economists. Oil rose as much as 3.5 percent to $58.69 a barrel, the highest since November, while the dollar declined to a six-week low against the euro.

The MSCI World Index added 2.1 percent, extending its weekly gain to 6.4 percent. The gauge of 23 developed countries has surged 38 percent since March 9 as earnings at companies from Credit Suisse Group AG to Ford Motor Co. beat estimates and optimism grew that the worst of the credit crisis has passed.

The S&P 500, which has risen 37 percent from a 12-year low in March, this week erased its loss for 2009.

‘More Comfortable’

Citigroup climbed 5.5 percent to $4.02 after the Fed said it needs $5.5 billion in additional capital. Bank of America, determined to require $33.9 billion, gained 4.9 percent to $14.17. Bank of America was raised to “market perform” from “underperform” at Wachovia Corp. following the stress tests.

Fifth Third Bancorp, Ohio’s largest lender, soared 59 percent to $8.49 as the central bank said it must raise $1.1 billion. JPMorgan Chase & Co. climbed 11 percent to $38.94 after the bank passed stress tests without needing fresh capital.

“Investors are feeling more comfortable to step into the market,” said Malcolm Polley, chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania, which manages $900 million. “Results of the stress tests were better-than- expected in terms of capital raising. That’s helping ease people’s fears.”

Banks, brokerages, investment firms and insurers made up 13.9 percent of the S&P 500 at the close of trading today, second behind technology companies. A week ago, they were No. 5 with 11.9 percent, behind technology, health-care, energy and consumer companies, according to data compiled by Bloomberg.

The group rallied 8.3 percent today to its highest level since Dec. 8.

Libor Eases

Financial shares also gained as the cost of borrowing dollars among banks in London capped its biggest weekly drop since March following the stress tests. The London interbank offered rate, or Libor, that banks charge for three-month loans fell two basis points to 0.94 percent today, according to the British Bankers’ Association, completing an eighth week of declines, the longest run of decreases since February 2008.

The Libor-OIS spread, a barometer of the unwillingness of banks to lend, fell today to the lowest level in more than nine months.

Analysts at UBS AG upgraded U.S. commercial bank stocks to “overweight” from “underweight” after the government’s review of the industry. Exxon Mobil Corp., the world’s largest oil company, increased 2.7 percent to $70.80. Chevron Corp. added 3.5 percent to $70.38. ConocoPhillips gained 7.3 percent to $46.91.

Jobs Report

The Labor Department said employers cut fewer jobs in April as signs emerged that the worst of the U.S. recession had passed and hiring for the next census boosted government staffing by the most since 2001. The jobless rate still jumped to 8.9 percent, the highest since September 1983, and probably won’t start retreating until an economic recovery is secured.

“It’s most likely that we’ve turned a corner,” said Jim McCaughan, who oversees $189 billion as chief executive officer for Principal Global Investors in Des Moines, Iowa. “I feel pretty confident that things are going to carry on repairing from here.”

McDonald’s Corp. added 2.9 percent to $54.92. The world’s largest restaurant company said global sales rose 6.9 percent in April as consumers sought cheaper food. Sales at U.S. restaurants open at least 13 months climbed 6.1 percent, while European orders rose 8.4 percent.

Nvidia helped lead a gauge of 75 technology shares lower after reporting first-quarter profit margins that missed some analysts’ estimates. Nvidia fell 14 percent to $9.25.

Technology Shares

Intel Corp., the world’s biggest chipmaker, slumped 3 percent to $15.29. International Business Machines Corp. declined 1.1 percent to $101.49.

Technology shares, which account for 17 percent of the S&P 500, have had the second-biggest advance among 10 industries this year, rising 15 percent.

Lowe’s Cos. fell 2.8 percent to $19.80. The second-largest U.S. home-improvement retailer was cut to “equal weight” from “overweight” at Morgan Stanley, which said the stock has risen “too much, too soon.”

Allstate Corp. slumped 5.4 percent to $26.12. The largest publicly traded U.S. home and auto insurer posted its third straight quarterly loss on investment writedowns and declines in private equity and hedge-fund holdings. Profit before investment losses was 84 cents a share, compared with the $1.25 estimate of 14 analyst surveyed by Bloomberg.

Inventories at U.S. wholesalers fell in March for the seventh straight month after a record drop in February, as distributors focused on eliminating excess supply from their shelves.

The 1.6 percent decline in stockpiles followed a revised 1.7 percent decrease in February that was bigger than previously estimated, the Commerce Department said. Still, sales plunged 2.4 percent to the lowest level since 2005.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.

Last Updated: May 8, 2009 16:52 EDT