Monday close

Tokyo stocks surged overnight as news of an alliance between two major banks lifted the ailing banking sector.

The market also gained from the Group of Seven communique issued on Friday on the establishment of a line of credit to help economies avert global financial contagion.

The Nikkei index rose 388.24 points, or 2.86%, to close at 13,952.75.

News over the weekend that Fuji Bank and Dai-Ichi Kangyo Bank are considering a broad alliance in the asset management business jolted bank shares. The banking sector was the biggest gainer today with the Nikkei average of bank shares jumping 5.17%.

"Banks are taking the lead today," said Yasuo Ueki, a general manager at Nikko Securities. "There isn't much in the way of bad news and negative incentives."

The Fuji and Dai-Ichi Kangyo partnership would be the first strategic alliance between two of Japan's top commercial banks, and the latest in a series of tie-ups and restructuring programs as banks struggle to cope with growing competition and Japan's worst recession in decades.