U.S. stocks surge on Obama pick

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks surged and the dollar jumped on Friday on reports that President-elect Barack Obama has chosen his point person to combat the worst U.S. economic crisis in 80 years, giving hope to deeply fearful markets.

Reports in the late afternoon that Obama will nominate Timothy Geithner, president of the New York Federal Reserve, as his Treasury secretary triggered a rapid turn in markets that were wallowing after the week's heavy sell-off in equities.

The dollar extended gains against the yen and U.S. Treasury bond prices added to earlier losses after the reports on Geithner, whom investors view as highly qualified and knowledgeable about the economy and the ways of Wall Street.

Along with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, Geithner has been among the most visible officials trying to pull the United States out of its biggest economic slump since the Great Depression.

"I think it is a brilliant pick, for no other reason than that it creates continuity in the middle of one of the greatest crises to ever face this country," said William O'Donnell, head of U.S. interest rate strategy at UBS Securities LLC in Stamford, Connecticut.

NBC reported that Obama was expected to announce his economic team on Monday in an effort to calm markets.

The news lifted a deep cloud of uncertainty that has been hanging over markets and helped offset fresh worries about the future of embattled U.S. bank Citigroup (C.N).

The Dow Jones industrial average .DJI closed up 494.13 points, or 6.54 percent, at 8,046.42. The Standard & Poor's 500 Index .SPX surged 47.59 points, or 6.32 percent, to 800.03. The Nasdaq Composite Index .IXIC jumped 68.23 points, or 5.18 percent, to 1,384.35.