World Markets Close Mostly Higher on US Rally

A rebound on Wall Street provided a lift Tuesday to most world stock markets outside of Asia, where shares slumped overnight.

A Filipino trader walks in front of the electronic board at the Philippine Stock Exchange at the...

A Filipino trader walks in front of the electronic board at the Philippine Stock Exchange at the financial district of Makati, south of Manila, on Tuesday Dec. 2, 2008. Philippine shares fell, dragged down by foreign selling following Wall Street's plunge overnight and word that the U.S. economy was in recession. The Philippine Stock Exchange Index ended down 91.70 points, or 4.65 percent, to 1,879.87 points.

(Aaron Favila/AP Photo)

The Dow Jones industrial average finished up 3.3 percent at 8,419.09 as investors bought back into equities after the savage retreat on Monday, when the blue-chip index closed down almost 700 points, or 7.7 percent, wiping out more than half of last week's gains.

Monday's losses caused Asian markets to dive. Japan's Nikkei 225 stock average tumbled 533.53 points, or 6.4 percent, to 7,863.69, and Hong Kong's Hang Seng index lost 5 percent to 13,405.85.

European stock markets showed little direction before the positive open of U.S. markets, then closed higher, tracking the recovery on Wall Street.

The FTSE 100 closed 1.4 percent higher at 4,122.86, helped by a 12.5 percent jump in the share price of British Airways PLC, which said it is in merger talks with Australian rival Qantas. Tesco shares soared 13.0 percent after reporting upbeat sales in the third quarter.

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The CAC-40 index in France closed 2.4 percent higher at 3,152.90, while Germany's DAX was the best performing major European index, up 3.1 percent at 4,531.79, as car companies such as Daimler AG and Volkswagen AG recouped most of the previous session's losses.

The recovery in European and U.S. stocks on Tuesday was largely a reaction to Monday's heavy losses, when a run of bad data increased fears of a prolonged and deep global economic downturn.

It all culminated with Monday's announcement by the National Bureau of Economic Research, considered the arbiter of the U.S. economic cycle, that the world's largest economy entered a recession in December 2007, much earlier than most predictions.

"If the U.S. economy is entering a depression, it is far too soon, even for an equity market that tries to discount conditions six months or a year ahead, to be looking for economic recovery," said Stephen Lewis, chief economist at Monument Securities.