The world's stock markets have kicked off the week with solid gains of between 4% and 7% in just one day, raising hopes of a sustained recovery.

Market gains, Monday 29 July 2002GMT

US Dow Jones index 5.4% US Nasdaq index 5.8% US S&P index 5.4% Germany's Dax 7.85% France's Cac 7%points UK's FTSE 4.6%points Japan's Nikkei 0.8%

Some investors were hoping that the markets' new-found strength marked the end of a nine-week long share price slump, triggered by doubts over the reliability of corporate accounts in the wake of the Enron and WorldCom scandals.

But others said Monday's rally reflected strong buying of stocks deemed cheap after the sharp declines last week and raised doubts about the rally's sustainability.

"There's a lot of bargain-hunting going on," said James Park, a senior trader at US brokerage Brean Murray & Co.

"Some of these stocks have been absolutely caned over the past few weeks, people are looking for value," said Barclays Stockbrokers equity strategist, Henk Potts.

Worldwide rise

The Dow Jones index of leading US shares, which sets the tone for stock markets worldwide, gained 447.49 points or 5.4% to close at 8,711.88.

Most sectors and most firms rose, including giants such as IBM, General Motors and Citigroup.

The rise marked the third-largest gain yet in one day for the Dow.

The hi-tech Nasdaq index gained 73.1 points or 5.8% to close at 1,333.25, while the broader Standard and Poor's index put on 46.12 points or 5.4% to close at 898.96.

In Europe, Frankfurt's blue-chip Dax index surged 7.85% to close at 3,859, the Paris Cac 40 index shot up 7% to close at 3,393.8, and London's FTSE 100 index closed up 4.6% at 4,202.

Earlier on Monday, Tokyo's leading Nikkei index closed a moderate 0.8% higher at 9,667, bolstered by a rebound on Wall Street last Friday.

More bad news?

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 the pace of the decline has accelerated sharply since the Enron and Worldcom scandals emerged.

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.

Bad corporate news still leaking out, with US telecoms firm Qwest admitting late on Sunday that it used improper accounting methods in 1999, 2000 and 2001.

And US traders are bracing themselves for more unwelcome revelations ahead of 14 August, when legal changes making chief executives personally liable for accounting errors are due to come into force.

'Fundamentally sound'

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

US Treasury Secretary Paul O'Neill talked up the recovery over the weekend, stressing in a US television interview that the country's economy remains fundamentally sound.

"I'm a deep believer in the potential and reality of the greatest economy ever conceived," he said.

"There has never been an extended period of time in our history where investments in the US economy didn't win," he added.

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.

In Europe, corporate results are expected from a range of closely watched blue chip firms including the UK's BP, Germany's Volkswagen and BNP Paribas of France.