Wall Street and European stocks rebounded more than one per cent yesterday in rallies that, along with rises in the dollar and global oil markets, pointed to a tentative recovery in investor confidence.

Coming after another difficult trading day in Asia, US equities bounced back from big losses last week, when the Federal Reserve’s decision to keep interest rates near zero fanned worries about the health of the global economy.

Financial stocks outperformed. At mid-morning, the Dow Jones industrial average was up 189.61 points, or 1.16 per cent, to 16,574.19, the S&P 500 had gained 21.21 points, or 1.08 per cent, to 1,979.24 and the Nasdaq Composite added 52.97 points, or 1.1 per cent, to 4,880.20.

The pan-European FTSEurofirst 300 topped one per cent even though Germany’s DAX was stuck in neutral. Shares of car giant Volkswagen fell 19 per cent after it was found to have cheated US emission tests. Investors cheered an unexpectedly clear election victory for the Syriza Party in Greece on Sunday that boosted hopes its bailout programme would stay on the road.

In Asia, at the start of the global trading week, equities markets sold off. Damage included 1.5 per cent to 2 per cent falls in Australia, Korea and Malaysia.

China was the sole Asian market to defy the region’s downtrend yesterday, with the Shanghai Composite index up 1.9 per cent and the CSI300 rising 1.75 percent.

Oil and metals markets also rebounded from falls at the end of last week, although emerging market stocks and currencies continued to struggle amid global growth worries caused by last week’s latest postponement in a long-awaited US rate hike.

The US dollar strengthened against a basket of major currencies on hopes the Fed was still on track to hike rates this year while the European Central Bank may ease further.

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