Asian stocks rebounded today, boosted by the biggest surge in US bank shares in 16 years and a decline in oil prices, providing some relief from fears about the global credit crisis spiralling out of control.
European stocks gained ground in early trade as banks surged after results from Wells Fargo sparked a relief rally on Wall Street.
At 0713 GMT, the FTSEurofirst 300 index of top European shares was up 1.7 per cent at 1,134.66 points.
Recently beaten-down European banking stocks were the biggest gainers, with UBS soaring 7.7 percent, Societe Generale gaining 4.3 per cent and Fortis surging 9.3 per cent.
Shares of high-profile Asian exporters such as consumer electronics giant Samsung Electronics gained as lower energy prices comforted investors about the outlook for demand, while shares of Japan's largest bank, Mitsubishi UFJ Financial Group, rose 3 per cent on hopes for the financial sector.
Upcoming earnings announcements from Wall Street banks could be a stress test for the current rally, with Merrill Lynch & Co expected to report later today its fourth consecutive quarterly loss and writedowns of up to $6 billion.
"With the subprime problems still out there, it does not mean a trend change, but we are seeing a short-term rebound led by recently battered banks and exporters," said Norio Shimura, deputy head of the equity department at Chuo Securities in Tokyo.
Japan's Nikkei share average rose 1 per cent, posting the biggest daily rise in a month.
Outside of Japan, shares in the Asia-Pacific region climbed 2.2 per cent for the largest single-day increase since April. Yesterday, the index plumbed its lowest since March 2007.
Hong Kong's Hang Seng index jumped 2.6 per cent, led by gains in global bank HSBC.
Despite the gains, stock markets globally remain entrenched in a bear market, with the MSCI all-countries world index down slightly more than 20 per cent from an all-time high reached in November.
Though the financial sector was jolted higher on signs of resilience at some banks, fears that the US government may have to take over the struggling top mortgage finance companies, Fannie Mae and Freddie Mac, continue to cast a pall of uncertainty over markets.
Reuters