Japan unveils stimulus plan

By Nick Olivari

NEW YORK (Reuters) - Wells Fargo (WFC.N), the fourth largest U.S. bank, on Thursday surprised investors with an upbeat earnings estimate, while Japan unveiled a record economic stimulus to counter a deepening recession.

Data on U.S. trade and jobless claims added to investor confidence on the back of an announcement from Japan's ruling party saying it would increase long-term lending to companies by a government-affiliated bank by 8 trillion yen (54.3 billion pounds).

The increase is part of a $154 billion Japanese initiative intended to increase lending, support small firms and promote green technologies.

White House economic adviser Lawrence Summers added to the rise in sentiment by saying the U.S. economy will end a sense of "free-fall" within a few months as government stimulus and rescue efforts take hold and inventory cycles return to normal.

That good news was in contrast to Europe, where Germany offered to take over stricken bank Hypo Real Estate HRXG.DE, the country's highest-profile casualty of the financial crisis and potentially the first nationalization of a German bank in the postwar era.

But it was Well Fargo that provided the biggest boost to sentiment after it said it expects to report net income of about $3 billion for the first quarter.

Wells Fargo is the first major U.S. lender to indicate how it fared in the January to March period and the bank's expected profit was more than twice what analysts on average expected. Wells Fargo shares soared more than 30 percent on the New York Stock Exchange on Thursday.

"We're in a market that is hungry for what I call rays of sunshine or glimmers of hopes on company fundamentals and economics," said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon.