Investors are hoping for an end to the recent share price rout amid tentative signs of new-found strength on world stock markets.

The Dow Jones index of leading US shares, which sets the tone for stock markets worldwide, ended last week higher than it began, helped by a strong rally on Wednesday.

European markets also closed in positive territory on Friday, lifted by the Dow's resilient performance.

Analysts said the fact that the markets held onto some of their gains going into the weekend is an encouraging sign.

"Something has changed," said Larry Wachtel of Prudential Securities.

"That mid-week upside explosion might have been an inflexion point, ushering in a more two-sided affair."

Sound economy?

Wednesday's rally, triggered by news that the US Congress had passed tough new penalties against corporate fraudsters, had been widely dismissed as a corrective adjustment following sharp declines earlier this month.

Stock market optimists also point to signs of resilience in the wider US economy, citing stronger than expected consumer confidence figures published on Friday.

However, some experts say last week's stock market gains were not convincing enough to justify forecasts for a return to more stable market conditions.

"There (were) bargain-hunters at work, but most are professional traders who will be quick to sell," said Alan Ackerman of Fahnestock and Co.

Some analysts add that US shares are still priced well above their long-term average value, in a sign that further sharp declines could be on the way.

London-based fund manager Tony Dye - who shunned most technology stocks even during the internet boom of the 1990s, earning himself the nickname 'Dr. Doom' - said US shares could still lose up to a fifth of their value.

"If the market were today to be back to its long-term average value, it would still have to fall by 20-odd per cent," he told the BBC's World Business Report.

Busy week

All the main global stock markets have been stuck in a downward trend since early 2000, when the internet share price bubble began to deflate.

But recent revelations of accounting irregularities and possible earnings manipulation at key US companies, including Enron and Worldcom, have accelerated the pace of the decline.

The Dow and London's benchmark FSTE 100 index have both lost about a quarter of their value since the beginning of the year, depleting pension funds and leaving investors nursing heavy losses.

Markets will be heavily influenced over the next few days by key US economic data, including the latest estimates for unemployment and new factory orders.

Traders will also be hoping for positive corporate news this week, with a string of blue-chip firms including oil giant Exxon Mobil and entertainment goliath Disney scheduled to unveil their latest results.