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Investors streamed into bank shares Monday on optimism the U.S. government's plan to rid banks of toxic assets will resuscitate profits.

Also buoyed were shares of public hedge fund and private equity managers, especially Blackstone Group LP (BX), as investors anticipate that Blackstone and others will be able to profit from the plan, whether directly or indirectly.

The U.S. Treasury Department unveiled a public-private partnership that could purchase up to $1 trillion in troubled mortgage-backed securities and other risky assets. The plan also could allow the banks to renew lending and ultimately help stabilize the financial system.

The announcement pushed shares of Citigroup Inc. (C) up 15% to $3.02, Bank of America Corp. (BAC) up 16% to $7.18, JPMorgan Chase & Co. (JPM) up 13% to $26.26 and PNC Financial Services Group Inc. (PNC) up 14% to $30.60. Bank shares plunged last year as financial companies took massive write-downs and scrambled to find new capital.

Bank stocks slumped to their lowest levels in more than 12 years more recently, with Citi trading at 97 cents a share on March 5. Treasury Secretary Timothy Geithner outlined the program in broad terms last month, but many investors said they were frustrated that more details weren't immediately provided.

Investors moved back into financial stocks in the past few weeks as bank executives offered reassuring comments about the state of their business. The market was bolstered after the U.S. Federal Reserve unveiled a plan to buy longer-term Treasurys, which should help grease the credit markets and drive down mortgage rates.

Shares of Blackstone, which said in February that a public-private partnership could help push up the price of its current and future real estate assets, were up more than 30% recently Monday, trading above $8 for the first time since early January. Shares of Fortress Investment Group LLC (FIG) and Och-Ziff Capital Management LLC (OZM) were up 30% and 10%, respectively, in recent trading.

Details released Monday assuaged investors and injected confidence into banks, shares of which have been the hardest-hit during the credit crisis. Banks lost $32.1 billion in the fourth quarter, the first quarterly loss since 1990, the U.S. Federal Deposit Insurance Corp. said.

Shares of the nation's two biggest investment banks also joined the rally. Morgan Stanley (MS) rose 7% to $21.72, and Goldman Sachs Group Inc. (GS) rose 5% to $102.18.

The government's latest move to revive the banking sector will help investors purchase $500 billion in distressed assets that remain on bank balance sheets. The program will use $75 billion to $100 billion in capital from the Troubled Asset Relief Program and capital from private investors.

The Treasury and private capital will provide equity financing and the FDIC will provide a guarantee for debt financing issued by the public-private investment funds to fund asset purchases.

"This program to address legacy loans and securities is part of an overall strategy to resolve the crisis as quickly and effectively as possible at the least cost to the taxpayer," Geithner wrote in an opinion piece published Monday in The Wall Street Journal.

-By Joe Bel Bruno, Dow Jones Newswires; 201-938-4047; joe.belbruno@dowjones.com

(Joseph Checkler contributed to this article.)