US STOCKS-Wall St rises as Bernanke eases fears on banks

* Bernanke comments ease fears of nationalizing banks

* Fed stands behind viability of banks

* Dow up 2.5 pct; S&P 500 adds 3.1 pct; Nasdaq up 2.7 pct

* For up-to-the-minute market news, click [STXNEWS/US] (Updates to later afternoon, changes byline)

By Chuck Mikolajczak

NEW YORK, Feb 24 (Reuters) - U.S. stocks rose on Tuesday, gaining more than 2 percent a day after hitting 12-year lows, after Federal Reserve Chairman Ben Bernanke signaled that nationalization of major banks was not at hand.

Bernanke testified to the U.S. Senate Banking Committee that the significant value built up in the country's banks would be lost if they were government-owned, easing investor fears that banks could be nationalized, wiping out shareholders.

Bernanke said that although there could be a time when it is necessary to close banks down, now is not the time. For more see [ID:nWAT011033].

Bank stocks surged. Bank of America (BAC.N) climbed nearly 18 percent to $4.60 and the S&P Financial index .GSPF jumped 8.2 percent.

"Bernanke believes banks have significant franchise value; if the government owned them that would be lost," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati, Ohio.

"That obviously speaks to the idea that the administration does not seem to want to nationalize banks and that's going to be viewed as a positive for the banks and that's going to help the overall market firm up a bit as well."

The Dow Jones industrial average .DJI rose 178.01 points, or 2.50 percent, to 7,292.79. The Standard & Poor's 500 Index .SPX jumped 23.08 points, or 3.10 percent, to 766.41. The Nasdaq Composite Index .IXIC added 37.03 points, or 2.67 percent, to 1,424.75.

Concern about the future of the U.S. banking system had dragged the Dow and the S&P 500 to 1997 lows on Monday. (Additional reporting by Leah Schnurr; Editing by Leslie Adler)