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Global stock markets close higher Global stock markets close higher
(about 1 hour later)
Stock markets around the world climbed on Tuesday after five days of losses, but analysts warned that volatility remains a concern.Stock markets around the world climbed on Tuesday after five days of losses, but analysts warned that volatility remains a concern.
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%.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.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.But analysts were cautious about reading too much into the upturn.
'Trepidation''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."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.""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.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.
Analysts are concerned that a broader correction in the markets could still take place. Overvalued?
Tuesday's market rise came even as US economic data signalled the world's largest economy was slowing.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.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.
'Damage done' 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.
London's FTSE 100 index had ended 1.3% up, while Germany's Dax added 0.9% and France's Cac closed 1% up. 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 BrownChief economist, Bear StearnsMarket sentiment remains tentative and it is going to take something substantially positive to turn confidence around David BrownChief economist, Bear Stearns
"Markets are still not out of the woods yet," said David Brown, chief economist with Bear Stearns, in a report."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.""Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around."
US economic data released on Tuesday showed factory orders had slowed in January, with durable goods orders seeing their biggest drop in more than six years. 'Damage done'
Other data showed US productivity was down in the last three months of 2006.
Together both sets of data showed the world's biggest economy was slowing, fuelling fears over a wider contraction.
Rebound
By mid-afternoon the benchmark US Dow Jones had added 0.9% or 107 points to 12,157.8 while the Nasdaq climbed 1.24% to 2,369.67.
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.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.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."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.""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%.Hong Kong's Hang Seng index climbed 2.1%, while the main indexes in Australia and China put on 2%.
Overvalued?
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.
The current stock slump was triggered last week by the biggest drop on China's market in a decade.
That fed into fears about the state of the US economy, at a time when many investors were questioning whether share prices had risen too far too quickly.
Many of the world's top indexes and shares had climbed to levels not seen since the dotcom bubble burst in 2000.