NEW YORK (AP) - Wall Street surged on a burst of optimism yesterday, propelling the Dow Jones industrials up more than 400 points on more signs of a reviving credit market and comments from Federal Reserve Chairman Ben Bernanke. All the major indexes finished with gains of three percent or more.

Investors who had sold furiously in recent weeks in response to immobile credit markets became more optimistic as bank-to-bank lending rates eased further. There is also less demand for ultra-safe Treasury bills, another sign that the credit markets are gradually returning to a healthier state. And Mr. Bernanke has hinted that the government will take more steps to help the economy.

The improvement in lending rates helped temper concerns that tight credit will contribute to a prolonged recession, but Mr. Bernanke still warned that the economy is likely to be "weak for several quarters, and with some risk of a protracted slowdown".

But he also told the House Budget Committee that a fresh round of government moves might help ease the country's economic weakness.

"The market liked what Bernanke had to say, and there were hints that he's leaving the door open for further moves in terms of rate cuts or economic stimulus," said Ryan Larson, head of equity trading at Voyageur Asset Management. "And, with credit easing in slow baby steps, the market has started to realize that this is going to be a process."

Wall Street was sifting through the first of hundreds of earnings reports expected this week, seeking clues about future business conditions. Among those reporting, oilfield services provider Halliburton Co. topped estimates, and CEO Dave Lesar told investors and analysts in a conference call, "We expect that any major macroeconomic disruptions will ultimately correct themselves."

Trading was orderly for much of the day, but the final hour again saw frenetic activity, this time to the upside. The market's tone was clearly better than during the previous two weeks, when investors' heightened anxiety about credit markets and the economy sent stocks plunging. The relative calm in Friday's session, when the Dow fell 127, and yesterday's trading, had more investors feeling confident that the worst of the market's volatility was behind it.

Still, with back-and-forth trading a hallmark during recoveries from plunges in the past, analysts and investors were also expecting that Wall Street would be subject to price swings for some time.

"We don't have any sense if this kind of a run is sustainable," said Phil Orlando, chief equity market strategist at Federated Investors. "We're groping quite literally for a bottom right here, but I'm not going to discount that we won't retest lows over the next couple of weeks."

According to preliminary calculations, the Dow rose 413.21, or 4.67 percent, to 9,265.43.

Broader indexes also rose sharply. The Standard & Poor's 500 index jumped 44.85, or 4.77 percent, to 985.4. The Nasdaq composite index rose 58.74, or 3.43 percent, to 1,770.03.

The credit markets were gradually responding to the series of bailout measures by governments around the world, including a joint US and European plan to buy stakes in private banks to boost their lending. Demand for Treasury bills, regarded as the safest assets around, lessened yesterday but remained relatively high in a sign that there was still much fear in the markets.

The three-month Treasury bill yesterday yielded 1.08 percent, up from 0.82 percent late on Friday. That's better than the 0.20 percent of last Wednesday, and the first time it surpassed one percent in more than a week.

Investors were also optimistic about the steady decline in interbank lending rates, which fell for a sixth straight day yesterday. The London interbank offered rate, or Libor, for three-month dollar loans fell 0.36 percent to 4.06 percent, the biggest daily drop since January.

The benchmark 10-year Treasury note was little changed. The yield, which moves opposite its price, fell to 3.84 percent from 3.93 percent late on Friday.

Todd Leone, managing director of equity trading at Cowen & Co., said many investors were feeling optimistic that credit is slowly becoming more available. He also believes that Mr. Bernanke's remarks, along with the fact earnings have not been dismal, are help markets move higher.

"People are just getting comfortable with buying again," said Todd Leone, managing director of equity trading at Cowen & Co. "We still could see another big drop, but those big drops are going to get less and less."

Investors also received a bit more detail about how Treasury Secretary Henry Paulson plans to roll out a $250 billion plan to recapitalize banks. Mr. Paulson said the government will own shares in the banks that should be paid back with a reasonable return, and expects that the investment will eventually make money.

Meanwhile, there were some optimistic data that showed the economy's health improved for the first time in five months in September as supplier deliveries and new orders strengthened, a private research group said yesterday. The New York-based Conference Board said its monthly forecast of future economic activity rose 0.3 percent, a much better reading than the 0.2 percent drop expected by Wall Street economists surveyed by Thomson/IFR.

Light, sweet crude rose $2.40 to settle at $74.25 a barrel on the New York Mercantile Exchange. Last week, it sank to an almost 16-month low on worries about a deep global recession obliterating fuel demand.

The Russell 2000 index of smaller companies rose 20.41, or 3.88 percent, to 546.84.

Advancing issues outpaced decliners by about five-to-one on the New York Stock Exchange, where volume was a light 1.23 billion shares.

Financial markets overseas also jumped. Japan's Nikkei stock average closed up 3.59 percent. Britain's FTSE 100 rose 5.41 percent, Germany's DAX index advanced 1.12 percent, and France's CAC-40 rose 3.56 percent.