Investors watched on Thursday to see how the market would go

Japan's key Nikkei index closed up 355.1 points, or 2.31%, at 15,696.28, after falling by 3% on Wednesday.

The rebound helped lift European stocks too. London's FTSE 100 closed up 29.50 points, while Germany's Dax exchange and the Paris Cac 40 were both higher.

In the US, main market indexes also closed ahead after the day's trading.

The Dow, Nasdaq and S&P 500 all showed gains.

Wednesday's fall in the Japanese was prompted by fraud allegations at web firm Livedoor.

The Japanese company may be delisted from the Tokyo Stock Exchange as criminal investigations into its activities continue, according to reports.

'Sudden shocks'

Meanwhile, the head of an investment firm involved in Livedoor's suspect business deals has been found dead on the island of Okinawa in a suspected suicide, police said.

The offices of HS Securities were searched on Monday as part of the probe into Livedoor, but the company has insisted it has done nothing wrong.

Several Japanese technology firms rose in value as trading returned to something like normality after Wednesday's events.

There has been no change in Japan's economic fundamentals, so now investors are moving in the opposite direction and buying back shares Katsushiko Kodama Toyo Securities

The exchange had suspended share-dealing on Wednesday at 1440 local time (0540 GMT) - 20 minutes early - as the number of transactions threatened to breach trading capacity.

Analysts suggested on Thursday that there was unlikely to be permanent damage to the market's prospects.

"While the market took some sudden shocks, there has been no change in Japan's economic fundamentals," Katsuhiko Kodama, senior strategist at Toyo Securities told the Reuters news agency.

"So now investors are moving in the opposite direction and buying back shares."

Investigation

A spokesman for the Nikkei exchange said Livedoor has been asked to provide more information about whether it broke market rules on giving information to shareholders.

The exchange will begin procedures to delist the company if it is found to be in violation of the law, Mitsuo Miwa said.

Check Nikkei index

Prosecutors raided the Tokyo offices of Livedoor on Monday, following allegations the company had violated Japanese securities laws.

Bosses at Livedoor denied the company broke market rules by giving misleading information to shareholders, but shares in the company dived on Tuesday, dragging the overall index lower.

One of Japan's best known internet companies, Livedoor had grown rapidly through a series of takeovers and stock splits into a group with a value of about 730bn yen ($6.3bn; �3.6bn) before the scandal erupted.

Its boss, outspoken entrepreneur Takafumi Horie, is a well-known personality in Japan.