U.S. stock markets jumped today on speculation the government takeover of Fannie Mae and Freddie Mac will stabilize the global financial system battered by $507 billion in credit losses.

Citigroup Inc., Wachovia Corp. and Bank of America Corp. added more than 4 percent in New York trading after Treasury Secretary Henry Paulson said the government will provide shortterm funding to mortgage lenders Fannie and Freddie. Pulte Homes Inc. and Lennar Corp. jumped more than 5 percent, leading homebuilders to a four-month high.

"This is significantly positive for the market," said Walter "Bucky" Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Ala., and doesn't own Fannie or Freddie shares. "Investors were looking for some kind of resolution to the problem and this eliminates a lot of uncertainty."

The Standard & Poor's 500 Index gained 9.59 points, or 0.8 percent, to 1,251.9 at 12:08 p.m. in New York. The Dow Jones Industrial Average rose 140.62, or 1.3 percent, to 11,361.58. The Nasdaq Composite Index slipped 9.65, or 0.4 percent, to 2,246.23, led by a 10 percent slump in SanDisk Corp. after UBS AG cut earnings estimates. About two stocks climbed for each that fell on the New York Stock Exchange.

The Federal Housing Finance Agency will take over Fannie and Freddie under conservatorship, replacing their chief executives and eliminating their dividends. Under the plan, the Treasury will receive $1 billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie.

"The market likes less uncertainty and this takes care of that," said E. William Stone, who oversees $66 billion as chief investment strategist at PNC Wealth Management in Philadelphia. "If this helps re-stabilize the housing situation it's got to be looked at as a positive."