The U.S. financial sector started the week higher, extending the rally from the previous session as President-elect Barack Obama's plan to boost infrastructure spending to create jobs lifted markets around the globe.

An exchange-traded fund tracking large-cap financial stocks, Financial Select Sector SPDR Fund, was up 4% in afternoon dealings Monday. The ETF jumped more than 8% on Friday after Hartford Financial Services Group Inc.'s efforts to reassure investors helped push the sector higher.

Hartford shares doubled on Friday and were up 7% in recent action. Elsewhere in the insurance sector, Genworth Financial Inc. surged more than 40%. Another big percentage gainer in the financial sector was KKR Financial Holdings, which rose more than 20%.

MetLife Inc. was holding its annual investor conference Monday. The company before the opening bell said it expected fourth-quarter and full-year net income to come in ahead of consensus estimates.

However, it warned it could post a fourth-quarter operating loss due to challenges in its variable-annuity business and falling markets. MetLife shares were down fractionally at last check.

The Wall Street Journal on Monday reported that a group working for state insurance regulators has approved several proposals submitted by the life-insurance industry in recent weeks aimed at lowering insurers' capital and reserve requirements.

Shares of NYSE Euronext rallied more than 20% following news that merger talks with German exchange operator Deutsche Boerse didn't bear fruit. Exchange stocks traded higher as CME Group Inc. rose 14% and IntercontinentalExchange Inc. gained 9%.

In other developments in the financial sector, Rodman & Renshaw Capital Group Inc. on Monday offered $7 a share in cash and stock to buy Cowen Group Inc. Cowen in a separate release quickly rejected the offer, and Cowen shares rose about 11%.

Banking stocks also gained ground Monday. Citigroup Inc., J.P. Morgan Chase & Co. and Morgan Stanley all posted gains, while Bank of America Corp. rose more than 10%.

Merrill Lynch & Co., which is being acquired by Bank of America, was also up more than 10%. The Wall Street Journal on Monday reported Merrill's chief executive, John Thain, has suggested to directors that he receive a 2008 bonus of as much as $10 million, but the company's compensation committee has balked at the request.

New York Attorney General Andrew Cuomo told the board of Merrill Lynch on Monday that the reported bonus of $10 million for Chief Executive John Thain "appears unjustified."

Cuomo said in a letter to the board that Merrill Lynch has lost more than $11 billion over the year and that "the performance of Merrill's top executives throughout Merrill's abysmal year in no way justifies significant bonuses for its top executives, including the CEO."

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