World stock markets are soaring

Worldwide markets have been jittery on interest rate fears

World stock markets have posted strong gains on Thursday, with the Dow Jones index surging past 11,000 points.

Wall Street's benchmark, the Dow, was up 1,8%, as the technology-heavy Nasdaq index rose 2.8% after the US central bank boss quashed inflation fears.

The day's biggest winner was India's BSE index, which shook off the hefty losses of past weeks to gain 6.9%.

Europe's main indexes, London's FTSE 100, Frankfurt's Dax and Paris' Cac 40 all added more than 2%.

The only major market posting losses was Sri Lanka, as tensions between the government and Tamil rebels increased.

Wall Street sets the pace

Wall Street's rally had been fuelled by comments from US central bank chairman Ben Bernanke, who had warned that high energy prices would be "long lasting", but calmed nerves by predicting that the knock-on impact of such increases would be limited.

"When inflation expectations are anchored... the monetary response can be more limited," Mr Bernanke said.

High inflation usually results in higher interest rates, which in turn tends to depress stock markets.

Mild economic data, suggesting only a small weekly rise in US unemployment and a healthy US manufacturing sector, helped to support the positive mood of investors.

However some analysts cautioned that it was too early to speak of a market recovery.

"I think the market is trying to look beyond any day's set of numbers and the next Fed comment and try to get a real assessment of how this inflection point in the economy is going to play out," said Jerry Webman, chief economist of Oppenheimer Funds.

"The crosswinds are blowing in different directions - the question is how far they're going to push us" he added.