Global stock markets close higher

All US indexes rose. The Dow Jones Industrial Average ended 1.3% up while the Standard & Poor's 500 rose 1.5% and the Nasdaq gained 1.9%.

The climbs echoed rises in Europe and Asia, and come a week after events in China triggered world stocks to slide.

But analysts were cautious about reading too much into the upturn.

'Trepidation'

"I don't think we should get too used to seeing all this green," said Jay Suskind, head trader at Ryan Beck & Co following the upturn.

"This market feels to me like it doesn't have legs, there just doesn't seem to be that euphoria out there. There is still trepidation."

The benchmark Dow Jones managed to recover about a quarter of its losses seen over the past week, after a global rout prompted by a 9% market fall in China last week.

Overvalued?

Tuesday's market rise came even as US economic data signalled the world's largest economy was slowing.

The Labor Department showed lower than expected productivity for the last three months of 2006, while the Commerce Department figures revealed a sharper-than-forecast drop in factory orders for January.

Equity markets have suffered heavy losses in recent days, after investors dumped stocks amid concerns that they were overvalued and that economic growth could slow.

Analysts are concerned that a broader correction in the markets could still take place.

The US rebound came after London's FTSE 100 index had ended 1.3% up, while Germany's Dax added 0.9% and France's Cac closed 1% up.

"Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around"
David Brown
Chief economist, Bear Stearns

"Markets are still not out of the woods yet," said David Brown, chief economist with Bear Stearns, in a report.

"Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around."

'Damage done'

Earlier on Tuesday, Japan's Nikkei index, which had lost 8% of its value in the past five sessions, climbed 1.2%, while the Bombay Stock Exchange closed 2.3% higher at 12,697.

Analysts, however, had cautioned against reading too much into the rally.

"I believe it's a recovery bounce," said Andre Bakhos, president of Princeton Financial Group in New Jersey.

"The hope is that it holds and a bottom can be built from it. But a lot of damage has been done, and it's like expecting an open-heart surgery patient to play tennis the next day."

Hong Kong's Hang Seng index climbed 2.1%, while the main indexes in Australia and China put on 2%.

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