North American stock markets rallied on Tuesday, bolstered by promising news from the U.S. financial sector.

In Toronto, the S&P/TSX composite index surged 313.47 points, or 4.1%, to close at 7,880.41.

Financial stocks on the TSX surged 12% as investors reacted positively to comments from Citigroup Inc. CEO Vikram Pandit, who said the bank was profitable in the first two months of 2009, setting the stage for the company’s best quarter since 2007.

Shares of Manulife Financial Corp. soared a sharp $1.68, or 18.3%, to close at $10.88 and Royal Bank of Canada shares jumped $4.15, or 14.4%, to $32.94.

Bank of Nova Scotia shares gained 12.3% to $28.70 and Toronto-Dominion Bank advanced 11.1% to $38.50.

Also higher was Bank of Montreal, up 10.2% to $29.71, and CIBC shares, up 10.7% to $41.08.

Shares of Sun Life Financial Inc. surged $2.53, or 16.9%, to close at $17.53.

Oil futures dropped on Tuesday after the U.S. government issued forecasts calling for slightly lower oil prices this year and next, as the recession takes its toll on demand. On the New York Mercantile Exchange, crude for April delivery ended down US$1.36, or 2.9%, at US$45.71 a barrel.

Still, energy companies on the TSX gained 2.9% during Tuesday’s trading.

Canadian Natural Resources Ltd. rose 6% to $46.00 and Nexen Inc. advanced 5.1% to $17.80.

Petro-Canada shares jumped $1.40, or 5.3%, to $27.89.

Also higher was Crescent Point Energy Trust, up 4.6% to $24.05 and Niko Resources, higher by 3.4% to $46.75.

Material stocks were a drag on the TSX, shedding 3.3% as gold futures declined.

Gold for April delivery dropped US$22.10, or 2.3%, to end at US$895.90 an ounce on the New York Mercantile Exchange.

The sub-gold index tumbled 7.3%.

Iamgold Corp. saw its shares tumble 12% after it announced late on Monday it would issue $275 million worth of common shares. Its shares gave up $1.13 to end at $8.30.

Shares of Yamana Gold Inc. tumbled 9.9% to $9.72 and Goldcorp Inc. dropped 7% to $33.99.

Kinross Gold Corp. fell 9.4% to $18.43 and Barrick Gold Corp. dropped $2.94, or 8.1%, to close at $33.30.

Gainers in the group included Potash Corp., up 6.9% to $96.26 and Agrium Inc., higher by 6% to $44.80.

Junior companies on the S&P/TSX Venture composite index added 4.36 points, or 0.5%, to close at 818.55.

The Canadian dollar rallied 0.83¢ to close at US77.81¢.

In New York, today’s gains marked the biggest rally yet this year.

The Dow Jones industrial average added 379.44 points, or 5.8%, to finish at 6,926.49, its largest gain since November.

The S&P 500 index gained 43.07 points, or 6.4%, to 719.60.

The Nasdaq composite index climbed 89.64 points, or 7.1%, to end at 1,358.28.

IE