Data, bank optimism lift Wall St; Cisco up late

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks rose on Wednesday after a private-sector reading on the labor market signaled unemployment may be receding and leaked bank stress test results suggested most banks are healthier than previously thought.

The number of U.S. private sector job losses in April touched the lowest level since November, according to a report by ADP Employer Services, the latest data suggesting the worst of the recession may have passed.

The government is due to release stress test results on Thursday. Several reports on the capital needs for 10 of the 19 banks under the government's microscope have revealed how well the industry will cope with perhaps the most severe recession since World War Two.

The rally in bank stocks was widespread, with Citigroup (C.N) jumping more than 16 percent to $3.86, Bank of America (BAC.N) up 17.07 percent to $12.69 and JPMorgan (JPM.N) gaining 7 percent to $37.22.

Concerns about the health of the banks were among the factors that pushed the market to 12-year lows in early March when many thought the government might be forced to nationalize several big banks.

"In my mind, at least, it just means we're getting that much closer to a resolution," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"What this does is that it begins to give investors some clarity that we are starting to separate the wheat from the chaff. We know who's performing well and is potentially able to (repay government bailout funds) and who still needs a little bit of help and a little more restructuring," he said.

If three-fourths or even half of the banks pass the test, then the government can focus on the few remaining banks that need federal help, Orlando added.