U.S. stocks jump 4 pct on bailout optimism

NEW YORK (Reuters) - U.S. stocks extended gains on Tuesday, lifting the benchmark S&P 500 index and the Nasdaq more than 4 percent, as investors bet that Washington would revive a plan to stabilise the U.S. financial sector this week.

That optimism helped fuel a rebound a day after the market experienced its worst slide in more than 20 years as the House of Representatives voted down the $700 billion rescue plan to mop up bad mortgage from banks' balance sheets.

U.S. President George W. Bush, Treasury Secretary Henry Paulson and congressional leaders pledged to continue negotiations.

Investors snapped up beaten-down shares across the board, with financial and technology companies among the standouts. Apple Inc (AAPL.O) contributed the most to the Nasdaq's advance, a day after the iPod-maker led the index to its worst day since the bursting of the Internet bubble.

The Dow Jones industrial average .DJI rose 341.45 points, or 3.29 percent, to 10,706.90. The Standard & Poor's 500 Index .SPX gained 45.35 points, or 4.10 percent, to 1,151.74. The Nasdaq Composite Index .IXIC added 74.99 points, or 3.78 percent, to 2,058.72.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)