One day after carnage, U.S. stocks higher

— -- One day after the historic carnage on Wall Street, U.S. stocks rebounded somewhat Tuesday, but stocks were volatile in Europe and fell in Asia.

The Dow Jones industrial average was up more than 200 points in early trading as investors sifted through the rubble of Monday's 778-point plunge, the biggest single-day point drop in history.

A snapback of some degree on Wall Street wasn't unexpected as carnage often attracts bargain hunters. Still, questions remain about how investors will proceed without a bailout plan in place to absorb soured mortgage and other debt from banks' balance sheets and restore confidence in lending.

Moves in the credit markets were more ominous. The benchmark London Interbank Offered Rate, or LIBOR, that banks charge to lend to one another rose sharply Tuesday, making it more expensive and difficult for consumers and businesses to borrow money. In addition, credit card debt and more than half of adjustable-rate mortgages are tied to LIBOR, so an increase isn't welcome for many consumers.

While U.S. political leaders have vowed to revisit the Monday's defeat of a $700 billion financial rescue package, the House isn't slated to meet again until Thursday.

President Bush again called for action early Tuesday. "I'm disappointed by the outcome (of the rescue plan) but I want to assure our citizens, and citizens around the world, that this is not the end of the legislative process," he said Tuesday in a brief White House appearance.

"Our economy is depending on decisive action from the government. The sooner we address the problem, the sooner we can get back on the path of growth and job creation," Bush said.

Light, sweet crude rose also partially rebounded but remained below $100 a barrel. Oil fell more than $10 a barrel Monday as investors worried that a weaker economy would curtail demand.

While investors focused on what might come from Washington this week, Wall Street was cheered by several economic readings.

A private research group reported that consumer confidence rose unexpectedly in September. The Conference Board said Tuesday its consumer confidence index rose to 59.8 from a revised 58.5 in August; Wall Street had expected a reading of 55.5, according to Thomson/IFR. The reading, which doesn't reflect attitudes following Monday's steep stock market sell-off, remains near a 16-year low.

The Chicago Purchasing Managers' index, which measures business conditions across Illinois, Michigan and Indiana, came in at 56.7 compared with 57.9 in August — a second straight month of a strong reading.

In Europe, Britain's benchmark stock index, the FTSE 100, fell by as much as 3% in early trading, with particularly sharp declines in the banking sector. But the index of 102 companies then recovered, rising 0.73% in afternoon trading.

In afternoon trading, Germany's DAX index fell 0.70%, and France's CAC-40 rose 1.15%. Meanwhile, Russia's regulator was forced to halt regular trading in its two major markets on Tuesday morning after stocks plunged in the opening minute of trading.

In Ireland, the government guaranteed all the deposits and borrowings — worth around 500 billion euros ($717 billion) — of six of the country's major lenders. Ireland's ISEF Index of financial shares surged as much as 25% on the back of the guarantee, before settling to a rise of 12% by midmorning.

Some analysts were crediting Ireland's unprecedented move with helping to keep European stocks overall from falling nearly as much as stocks in the United States and Asia did.

"The Irish government's blanket insurance could form a template for a European approach to this crisis," said Rob Carnell, London-based chief international economist at ING Financial Markets.

Stocks plummeted across Asia in panic selling.

Japan's benchmark Nikkei 225 index nose-dived more than 544 points, or 4.6%, to 11,199.07, with popular stocks like Sony down 6.8% and Toyota Motor down 4.6%. by midday trading. It ended the day down 4.12%, its lowest level in more than three years. The Wall Street troubles reverberated across Europe too, with stocks turning volatile.

Hong Kong's Hang Seng Index plunged as much as 6% but recovered to end up 0.76%. In the South Korean capital Seoul, the Kospi index lost 3.5%. And in Singapore, the Straits Times Index fell nearly 3%.

Asian markets had fallen Monday, unimpressed by the bailout package engineered over the weekend by Treasury Secretary Henry Paulson and congressional leaders. But they were even more dismayed Tuesday by the possibility there might be no deal at all — or a long delay. Asians are worried about continuing financial turmoil and a U.S. recession, which would smother demand for Asian exports.

In an online analysis of the Asian market reaction Tuesday, Moody's Economy.com blamed Congress for "destroying hopes that the global financial market turmoil would soon come to an end … The longer it takes for a rescue package to take effect in the market, the more severe the U.S. recession will be."

"This is a hint of what will happen if they don't pass a rescue," said Song Seng Wun, regional economist at the CIMB-GK investment firm in Singapore. "It could be 10 times worse."

He predicts Congress will come through with a bailout that holds "Wall Street more accountable … Fat cats will be made to pay more for their excesses.

"Something will be passed."

Latin American stocks opened higher Tuesday. Sao Paulo's Ibovespa index rose 2.7% Tuesday morning to 47,271 after falling 9.4% a day earlier, its steepest fall since 1999.Mexico's main IPC index was up 1.3% to 24,272 while Chile's Ipsa index opened 1.8% higher to 2,678.

Tuesday's gains were being driven by large-scale investors shopping for bargains, said Marcos Crivelaro, a finance professor at Sao Paulo's FIAP university."They are seeing this as an opportunity," Crivelaro told Brazil's Globo TV.