Stocks rallied, with the Standard & Poor�s 500 Index rebounding from its lowest level of the month, and Treasuries fell as U.S. housing starts topped economists� estimates and German business confidence unexpectedly grew.

The Standard & Poor�s 500 Index surged 3 percent to 1,241.21 at 4 p.m. in New York and the Dow Jones Industrial Average jumped 335.66 points, or 2.9 percent, to 12,101.92, the biggest gains since Nov. 30 for both. Spain�s government bonds stayed higher as the nation sold 5.64 billion euros ($7.4 billion) of Treasury bills. The yield on the 10-year U.S. Treasury note advanced 11 basis points to 1.92 percent, with the dollar weakening versus all 16 of its most-traded peers. Oil gained 3.6 percent and the GSCI index of 24 commodities climbed for a second day.

U.S. builders broke ground in November on the most houses in over a year, a sign that the market is stabilizing heading into 2012. Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow at least 2 percent next year. German business confidence unexpectedly rose for a second month in December, according to the Ifo institute.

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