The bank said late Tuesday that in less than two weeks it had raised US$13.47 billion through the sale of 1.25 billion shares.

That helped put the company more than halfway towards raising the money the government said was necessary based on a review of the bank's books.

Bank of America is one of the biggest US banks and its ability to raise cash is a welcome sign for traders still worried about how it will fare if consumers fall behind on more debt from mortgages to credit cards.

The government found in its recent "stress tests" on the nation's 19 largest financial companies that Bank of America would need US$33.9 billion to protect against losses if the economy worsened. That was more than any other bank reviewed.

Stability

The company already raised US$7.3 billion from the sale of a business in Asia since the government issued its report cards for banks on May 7.

Regional bank Regions Financial Corp said Wednesday it plans to raise US$1.25 billion in capital to meet the government's requirement.

The stability of banks and an increase in lending that could result are seen as crucial to a sustained recovery in the economy.

Bank of America shares rose 6.0 per cent in the early going.

Subodh Kumar, an independent investment strategist in Toronto, said it is an encouraging sign that banks have been able to turn to the stock market to raise capital.

But he said for the market to hold its gains investors will need to more signs of improving in the economy.

"This looks more like a market that needs the fundamentals to catch up with it," he said.

In the first half-hour of trading, the Dow Jones industrial average rose 63.95, or 0.8 per cent, to 8,538.80.

Depression

Two hours to market close, however, stocks gave up some gains but was still up 26 points or 0.3 per cent.

Stocks finished narrowly mixed Tuesday after a record low in housing construction stirred unease about the economy's direction.

The Standard & Poor's 500 index has rallied 34.2 per cent since March 9 as investors have set aside some of their biggest worries about the economy sliding into a depression.

Investors are again looking to Washington. US Treasury Secretary Timothy Geithner projected financial institutions would repay US$25 billion of loans in the next year that were part of the government's financial rescue plan. In prepared testimony for the Senate Banking Committee, Geithner said the money will be used to further assist institutions in need of government help.

- AP