Global Bank Rally Drives Futures Sharply Up

U.S. stock index futures jumped sharply ahead of the open Monday, as bank stocks across the world rallied after details of the Basel III banking capital rules were released and after news of a jump in Chinese industrial output.

Shares of Citigroup, Bank of America, Wells-Fargo and JPMorgan rose in pre-market trading. The SPDR Financial exchange-traded fund, which closely tracks the S&P 500 banking sector, rose 1.5 percent in premarket trading.


In another boost to the banking sector, Keefe, Bruyette and Woods upgraded European banks to "overweight" from "neutral," citing the delay in implementation of the Basel bank capital rules to 2018 and the fact banks are returning to "normality."

European stocks were higher across the board with banks leading the gains on news that they will now have longer-than-expected to comply with the capital requirement rules. The agreement also helped boost the euro against the dollar. Asian benefited from a report that Chinese industrial output rose 13.9 percent from the year-ago period in August.

Wall Street has seen two consecutive positive weeks so far in September. In the first half of the month, the major averages have posted gains that have essentially wiped out August's losses.

No major economic releases or earnings are scheduled for Monday. Quarterly numbers from Fedex, Kroger, and Research In Motion will be released later this week.

In merger and acquisition news, Hertz Global will buy car rental company Dollar Thrifty after raising its offer to $1.56 billion, outflanking a rival bid from AvisBudget Group . The Hertz bid is worth $50 per share and also has a $10.80-per-share increase in the cash portion of its bid.

Hewlett-Packard is said to be near a deal to buy ArcSight, a company specializing in cybersecurity, according to the Wall Street Journal. The reported deal is said to be worth about $1.5 billion.

BP is telling analysts at Citigroup that it believes compensation claims related to the Gulf of Mexico oil spill will be less than the $20 billion the company has put in its claims fund.

Shares of BP were higher in London trading and were up nearly 1 percent premarket in New York trading .

Congress returns from its month-long break this week, with the small business jobs bill one of the items topping its agenda. Many political analysts see that as the last hope for the Democrats on improving the job market ahead of the November elections.

- Peter Schacknow, Senior Producer, CNBC Breaking News Desk, contributed to this report.