Global stock markets recovered yesterday as investors hunted for bargains a day after sharp losses caused by heightened concerns for the US economy and in particular its ailing auto sector.
On Wall Street, the Dow Jones Industrial Average rose 1.39 per cent and the tech-heavy Nasdaq index gained 1.69 per cent in afternoon trading.
London led the rally in Europe, closing up 4.34 per cent after some upbeat corporate results. Paris rose 3.24 per cent and Frankfurt put on 2.39 per cent.
There was a more mixed picture in Asia, where Tokyo lost 1.54 per cent while Hong Kong was up 0.89 per cent and Shanghai gained 0.64 per cent.
"It's a mixed bag out there today," said David Evans, a market analyst at online share betting company Betonmarkets.com in London.
Evans said the FTSE 100 index in London rose because of better than expected consumer confidence levels and company results from retailer Marks and Spencer.
"Today's session is about short-term bargain hunting on the back of stronger than expected company earnings," Joshua Raymond, market strategist at spread-betting company City Index said, referring to the situation in London.
"The market remains incredibly sensitive to economic data and company results, and consequently these violent swings are likely to remain for some time," he added.
Wall Street dragged down global stock markets on Monday after US President Barack Obama warned that General Motors and Chrysler must come up with viable plans to return to profitability or face bankruptcy.
"Investors have had time to digest the president's plan for the automakers," said Al Goldman, market strategist at US advisory firm Wachovia Securities.
Frederic Dickson of US investment firm DA Davidson & Co. said the market was in "a prolonged bottoming (out) process, experiencing a continuing flow of sharp rallies followed by sharp pullbacks.
"We apparently are in pullback mode and may remain there until investors digest" new economic data that included a record 19 per cent plunge in US home prices in the 20 largest cities in January from a year earlier, he said. US consumer confidence was flat in March, according to The Conference Board, a US research group, which put its main index at 26.0 - little changed from 25.3 in February, a record low.
Most economists had predicted the index would rise to 28. In Asia, Hong Kong share prices closed up 0.89 per cent as investors looked for bargains following a steep decline the previous session, dealers said.
Seoul rose 0.74 per cent, Shanghai gained 0.64 per cent and Singapore jumped 1.60 per cent. Tokyo closed down 1.54 per cent but losses were far less severe compared to Monday when the Japanese market had plunged 4.53 per cent.
"The (overall) market needed to take a breather for a while amid lingering uncertainties over economic fundamentals but there also seems to be appetite for bargain hunting," Lee Woo-hyun of KTB Securities told Dow Jones Newswires.