The Dow Jones industrials were about 150 points higher before noon, after reaching a 250-point gain earlier in the day. The Standard & Poor’s 500-stock index rose nearly 2 percent, and the Nasdaq composite index was up slightly.

After weeks of extraordinary coordinated efforts by the world’s governments and central banks, investors awoke on Monday to find — finally — signs that credit was beginning to flow more easily.

Borrowing rates among banks, a crucial gauge of fear in the credit markets, dropped the most in nine months, according to one measure. The cost that banks charge one another for three-month loans fell back to its levels in September, based on the closely watched Libor rate. The rate for overnight interbank loans fell to the lowest level in more than four years.

It appeared that lower interest rates, enormous injections of liquidity and the unprecedented moves by world governments to take ownership stakes in large banks had eased some of the stress that had plagued the credit markets for weeks.

The flow of credit is critical to the daily functioning of the economy, from major banking institutions to neighborhood stores.

Investors were also encouraged by remarks from Ben S. Bernanke, the Fed chairman, who told Congress that he supported a new spending package from the government to bolster the flailing economy. Mr. Bernanke did not specify the size or scope of the plan, but his comments were at odds with the position of the Bush administration, which has asked for Americans to be patient for the bailout package to work through the financial system.

Mr. Bernanke said that the “risk of a protracted slowdown” merited the introduction of new measures to help individual Americans gain access to credit.

Henry M. Paulson Jr., the Treasury secretary, appeared later in Washington to announce that the nation’s banks had until Nov. 14 to apply for government financial support. He also tried to assure Americans that the bailout program might end up making money for the government.

“This is an investment — not an expenditure,” Mr. Paulson said. “And there is no reason to believe that this program will cost taxpayers anything.”

The gains on Wall Street followed positive sessions on the European and Asian exchanges. Stocks in London and Paris were about 4 percent higher; stocks in Frankfurt rose about 1 percent.

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