Benefiting from a continuing surge in mortgage refinancing and credit card debt, Citigroup and Bank of America both reported first-quarter earnings yesterday that beat Wall Street's predictions.

The unexpectedly good earnings from two of the three biggest U.S. banks got the stock markets off to a good start yesterday, and the mood held.

The blue-chip Dow Jones industrial average gained 147.69 points, or 1.8 percent, to 8351.10, in light trading. The Standard & Poor's 500-stock index rose 16.93 points, or 1.9 percent, to 885.23. The tech-laden Nasdaq composite index advanced 26.10 points, or 1.9 percent, to 1384.95.

Citigroup's shares jumped $1.08, or 2.9 percent, to $38.43, while Bank of America's stock price rose 66 cents, or 0.9 percent, to $72.

The stocks of other financial services companies also also rose yesterday. J.P. Morgan Chase, the world's second-largest bank by assets, rose 95 cents, to $26.54. It is due to report earnings tomorrow.

And Fannie Mae, the biggest buyer of U.S. mortgages, gained $2.48, to $71.49, after reporting first-quarter earnings and raising its earnings growth expectations for the year.

Citigroup, the nation's largest financial services company, said net income from continuing operations rose 18 percent, to $4.10 billion, excluding a $1.4 billion one-time gain from an initial public offering of stock in its Travelers Property Casualty. Net income per share rose 20 percent, to 79 cents, surpassing analysts' estimates by 2 cents per share.

Sanford I. Weill, Citigroup chairman and chief executive, noted that Citigroup delivered strong results "despite an environment of significant political and economic uncertainties."

Bank of America reported first-quarter earnings of $2.42 billion, or $1.59 per share, a 15 percent increase from $2.18 billion, or $1.38 per share, last year. The bank easily topped analysts' forecasts of $1.48 in earnings per share, according to a survey by Thomson First Call.

The banks' solid results were driven in large measure by the behavior of consumers, whose persistence in borrowing and spending has supported the economy's tepid recovery.

Citigroup reported a 26 percent rise in income from its consumer banking division, which includes its credit card, loan and retail banking units. Credit card income rose 27 percent, to $735 million.

Bank of America reported that customers were charging more to credit and debit cards and using them more frequently.

Both banks reported a drop in money lost on bad loans, and Bank of America said credit card delinquency rates also fell.

Bank of America said mortgage-banking income more than doubled to $405 million from a year earlier.

Citigroup also said it experienced "high demand" for mortgage banking and reported a 53 percent increase in new student loans over the same period of last year.

Income from Citigroup's retail banking division, which includes home loan refinancings, jumped 54 percent from a year earlier, to $942 million, and rose 63 percent in North America. That includes business from Golden State Bancorp, a California bank that Citigroup bought last year.

"Retail banking was very good," said Ken Worthington, an analyst for CIBC World Markets. "They've grown through acquisition but the credit quality trends continue to be quite good there."

Worthington said it was difficult, however, to separate how much of the new retail banking business came from Golden State and how much from existing Citigroup branches.

Citigroup, which has been plagued by legal troubles, had already taken a $1.3 billion charge to cover the cost of a settlement with the Securities and Exchange Commission over the role it played in hiding Enron's debt. That sum also includes money to pay for proposed settlements with regulators over research analysts' conflicts of interest and initial public offering practices.

FleetBoston Financial, New England's largest bank, yesterday rose 52 cents, or 2.1 percent, to $25.61, on the NYSE. Despite reporting a 23 percent decline in first-quarter earnings yesterday, investors were cheered by improving asset quality at FleetBoston.

Altria Group rose 89 cents, to $31.48, after a judge lowered the payment the company's Philip Morris USA tobacco unit must make to appeal a $10 billion damage verdict.

Other Indicators

* The New York Stock Exchange composite index rose 80.65, to 4956.28; the American Stock Exchange index rose 6.08, to 838.08; and the Russell 2000 index of smaller-company stocks rose 6.31, to 377.61.

* Advancing issues outnumbered declining ones by 3 to 1 on the NYSE, where trading volume fell to 1.1 billion shares, from 1.12 billion on Friday. On the Nasdaq Stock Market, advancers outnumbered decliners by 2 to 1 and volume totaled 1.14 billion, down from 1.21 billion.

* The price of the Treasury's 10-year note fell $3.44 per $1,000 invested, and its yield rose to 4.02 percent, from 3.97 percent on Friday.

* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 120.30 yen, down from 120.44 late Friday, and a euro bought $1.0775, up from $1.0758.

* Light, sweet crude oil for May delivery settled at $28.63, up 49 cents, on the New York Mercantile Exchange.

* Gold for current delivery fell to $324.20 a troy ounce, from $327.90 on Friday, on the New York Mercantile Exchange's Commodity Exchange.