US STOCKS-Wall St jumps as bailout approval nears

* "Fundamental agreement" reached on bailout plan

* Market shrugs off bleak data, GE's profit warning

* Financial shares lead rally

* Dow up 1.8 pct, S&P 500 up 2 pct, Nasdaq up 1.4 pct

(Updates to close)

By Steven C. Johnson

NEW YORK, Sept 25 (Reuters) - Wall Street snapped a three-day losing streak on Thursday as Congress closed in on a deal for a $700 billion financial-sector bailout that investors hope will thaw credit markets and revive lending.

All three major indexes ended up at least 1 percent, with bank shares such as JPMorgan Chase (JPM.N) and Bank of America (BAC.N) leading gains after Senate Banking Committee Chairman Chris Dodd said lawmakers had reached a "fundamental agreement" on the principles of a rescue plan.

Companies seen as economic bellwethers, such as IBM (IBM.N), also rose on hopes the rescue package would spur a pickup in consumer and business spending.

"I certainly think that Congress will pass something and that will help for a little while. It gives us some time to unwind some of the positions and see where we stand when the smoke clears," said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas.

The Dow Jones industrial average .DJI was up 196.89 points, or 1.82 percent, at 11,022.06. The Standard & Poor's 500 Index .SPX was up 23.31 points, or 1.97 percent, at 1,209.18. The Nasdaq Composite Index .IXIC was up 30.89 points, or 1.43 percent, at 2,186.57.

The package to which Congress tentatively agreed would make a first slug of $250 billion available immediately, the Wall Street Journal reported, and would contain limits on "golden parachutes" paid to company executives.

The Treasury Department declined to comment on earlier statements from Sen. Charles Schumer, the New York Democrat who chairs the congressional Joint Economic Committee, that a deal could be reached Thursday.

U.S. President George W. Bush reiterated on Thursday that the United States was facing a serious financial crisis and urged bipartisan cooperation on the bailout bill.

Bank shares spearheaded Thursday's rally, with Bank of America up 4 percent at $34.37 and JPMorgan up 7.3 percent at $43.46. An index of financial shares .GSPF jumped 2.6 percent.

IBM, the Dow's top advancer, rose 3.1 percent to $120.11.

Nike (NKE.N) shares shot up almost 10 percent to $65.01 after earnings from the world's largest athletic footwear and apparel company beat estimates.

Fear that Congress would delay or water down the bailout had weighed on stocks in recent days, and the three major indexes were still down some 3 percent for the week.

But investors said getting a rescue package voted into law was crucial to preventing an even deeper freeze in bank lending around the world and a bigger swoon for stocks.

"It's an important step. Without it, things would have got worse, so certainly, people are relieved," said Al Goldman, chief market strategist at Wachovia Securities in St. Louis.

"But we're still in a serious financial crisis," he added. "I think we have more struggling to do."

Indeed, the market's advance came despite economic reports that were bleak all around and a profit warning from General Electric (GE.N).

One report showed that the number of people filing for jobless benefits unexpectedly surged in the latest week.

Other government data showed a sharper-than-expected slide in orders for durable goods and a drop in sales of new single-family homes in August to their lowest in 17 years.

The grim economic news and a likewise gloomy outlook for corporate earnings suggest Thursday's sunnier mood among stock traders would be short-lived, said Keith Hembre, chief economist at First American Funds in Minneapolis.

"It will probably be measured in weeks, not months," he said. "We're still playing defense, and there's nothing in the plan that suggests it will improve domestic demand or turn the cyclical downtrend in growth, jobs or corporate earnings."

About 1.21 billion shares changed hands on the New York Stock Exchange, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.88 billion shares traded, also below last year's daily average of 2.17 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of 2.5 to 1. On the Nasdaq, advancers beat decliners by about 1.5 to 1. (Additional reporting by Kristina Cooke; Editing by Jan Paschal)