Stocks Post Biggest Gains Since Last July

American stocks broke a week-long slump and posted their biggest gains since July after Treasury Secretary Henry Paulson eased concern that rising mortgage defaults will undermine the economy.

Countrywide Financial Corp., Lehman Brothers Holdings Inc., and Citigroup Inc. led financial shares to their steepest advance in more than six months.

Twelve stocks rose for every one that fell on the New York Stock Exchange.

Asian stocks surged the most in almost two months and emerging markets had their best performance since June. The drop in global equities since February 27 erased $3.3 trillion in market value.

The Standard & Poor's 500 Index added 21.29, or 1.6%, to 1395.41. All 10 of its industry groups rose. The Dow Jones Industrial Average climbed 157.18, or 1.3%, to 12,207.59. For the S&P 500 and Dow, it was the best performance since July 24. The Nasdaq Composite Index increased 44.46, or 1.9%, to 2385.14.