European and Asian stock markets recovered after the U.S. Federal Reserve's larger-than-expected interest rate cut.
Britain's benchmark FTSE 100 rose 2.8 percent to 6,460.00. Germany's DAX gained 2.3 percent to 7,750.84 and France's CAC-40 climbed 3.3 percent to 5,730.82.
Japan's benchmark Nikkei 225 stock index soared 3.7 percent to close at 16,381.54 points, marking its biggest point gain in more than five years. Hong Kong's Hang Seng index jumped 3.98 percent to 25,554.64.
Investors cheered the Fed's decision to cut its benchmark interest rate by a half percentage point to 4.75 percent, a move aimed at keeping problems in the mortgage market from causing a recession in the U.S. economy - a key export market for many Asian and European companies.
"They did the right thing," Joseph Han, a strategist at Daewoo Securities Co. in Seoul, said of the Fed. Many analysts predicted a quarter-point reduction in the fed funds rate.
Kaoru Yosano, Japan's chief government spokesman, also welcomed the Fed's decision.
"They have reacted very quickly to the realities," he told reporters.
In New York on Tuesday, the Dow Jones industrial average surged 335.97 points, or 2.51 percent, to 13,739.39 _ its biggest one-day point jump in nearly five years. Stocks bounded higher again Wednesday as Wall Street extended its rally.
By midday in New York, the Dow rose 0.7 percent to 13,833.76. Broader stock indicators also rose.
European stocks held their gains even as shares of mortgage lender Northern Rock PLC fell 16 percent as investors sought to reduce their holdings amid takeover speculation, wiping out a modest rally a day earlier.
Stock markets in South Korea, India, Australia and Singapore also advanced, although Chinese shares faltered.
The U.S. rate cut will benefit Asia's emerging economies, Asian Development Bank President Haruhiko Kuroda said.
"It will definitely sustain the strong economic growth in the U.S., which is beneficial to emerging economies in Asia," he said in Manila at a forum sponsored by the World Trade Organization.
Later Wednesday, the Bank of Japan decided to leave its key interest rate unchanged at 0.5 percent, as widely expected.
The world's central banks like to show they are working together to maintain global stability, and the Bank of Japan would find it hard to raise rates at a time the U.S. central bank is cutting them.