Shares of U.S. regional banks gained sharply in premarket trading on Monday, as investors tiptoe back into the sector after the failure of First Republic Bank last week triggered another round of widespread sell-off.

The collapse of three U.S. lenders in two months has sent shockwaves through the sector, with investors dumping shares of even those banks that analysts have said are financially sound.

The sector, however, showed some semblance of stability on Friday, with the KBW Regional Banking index gaining nearly 4.7%. The index is down more than 26% since the beginning of the crisis in March.

In premarket hours on Monday, PacWest Bancorp surged 36% to $7.82, after rallying nearly 82% in their last trading session. Peers Western Alliance Bancorp and Comerica Inc surged 8% each, while Zions Bancorp and Keycorp were up 4% each.

First Horizon Corp climbed nearly 4%. Last week, Canada's Toronto-Dominion Bank called off its $13.4 billion takeover deal for First Horizon, citing regulatory uncertainty.

(Reporting by Niket Nishant in Bengaluru; Editing by Anil D'Silva)