A welcome sight?

An unusual sight greeted traders on Tuesday, as leading stock market boards across the world all stood in positive territory.

Overnight gains in the US had prompted a bout of optimism, thanks to stronger-than-expected manufacturing data and hopes of an imminent rate cut.

A healthy update on Germany's economic sentiment followed on Tuesday, buoying European markets.

By 1030 GMT, leading markets in London, Frankfurt and Paris were all up almost 1% to new five-month highs.

Wall Street's Dow Jones index had ended the day up more than 2% at its best close since May 2002.

The gains finally pushed Japan's Nikkei index through the 9,000 point barrier - viewed by traders as a psychologically crucial level - for the first time since December.

""The German ZEW economic sentiment survey was above consensus, and in conjunction with the positive Empire State survey yesterday in the States, boosts hopes of an economic upturn," said one trader in London.

European push

The Centre for European Economic Research said its German expectations indicator suggested investors were more optimistic about the outlook for Germany's economy.

It compounded hopes of a global lift following Monday's figures from the New York Federal Reserve, which showed factory activity in the state was better than at any point in its two-year history.

How far along this rally can continue is going to pretty much depend on Wall Street Hajime Yagi, Meiji Dresdner Asset Management

Hopes of a cut in US interest rates following the European Central Bank's surprise cut last week, also kept investors keen across world markets.

But analysts warned that the current optimism was very fragile.

Mark Tinker, head of strategy at the London brokerage Execution Ltd said:

"There will be a few periods of high risk in the months ahead.

"If the Fed does not cut rates by 50 basis points as expected then the bubble in the bond market may pop and no other market will be able to withstand that type of sharp shock."

Keeping it up

In Asia, Japan's Nikkei average closed 2% higher on Tuesday at 9,033, after teetering around the 9,000 level for weeks.

"With the US having been as strong as it was, we've been able to push above the 9,000 line," said Hajime Yagi, general manager at Meiji Dresdner Asset Management.

But he cautioned:" Whether we're going to be able to maintain that is still an open question.

"How far along this rally can continue is going to pretty much depend on Wall Street."