Global stocks were mixed yesterday after a sizzling rally the previous day fuelled by a new US government plan to clean up its banking system and spark a global recovery.

On Wall Street, the Dow Jones Industrial Average fell 0.71 per cent and the Nasdaq index tumbled 1.05 per cent in afternoon trading. In London, the FTSE 100 index of leading shares closed down 1.05 per cent.

In Paris however the CAC 40 index finished up 0.17 per cent and the Frankfurt Dax also rose 0.26 per cent. Asian stocks earlier leapt up following the rally on Wall Street on Monday, with Tokyo gaining 3.32 per cent.

"Traders seem to be taking a breather following the biggest one-day gain since November," said Joseph Hargett at Schaeffer's Investment Research. In Asian markets yesterday, Hong Kong soared 3.44 per cent and Tokyo closed at a more than 10-week high, while Seoul added 1.85 per cent and Sydney gained 0.84 per cent after Mr Geithner unveiled his banking sector plan on Monday.

Elsewhere in Europe, Swiss stocks closed down 0.15 per cent and Belgium's benchmark index also fell 0.27 per cent. But shares were up in Milan by 0.14 per cent and in Madrid by 0.47 per cent.

Market action came as Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke, in testimony to Congress, urged an overhaul of financial regulations to allow authorities to seize key financial firms outside the banking system to maintain economic stability.

US President Barack Obama also emphasised the need for more regulation ahead of a summit the Group of 20 developed and developing economies in London on April 2 where France and Germany are pushing for regulatory reforms.

Calling for G20 leaders to agree a strategy to kickstart the global economy, Mr Obama said "we are living through a time of global economic challenges that cannot be met by half measures or the isolated efforts of any nation."