Stock markets in New York, London, Paris and Frankfurt have recovered some of their sharp losses from last week.

Wall Street's main stock indexes put in their strongest performance in more than a month as bargain hunters moved in to end a four-week sell-off.

Rising stock indexes in New York gave investors longed-for reassurance after a month of rocky trading sparked by fears of a fragile US economy beset by corporate sleaze and geopolitical instability.

On Friday, stock indexes around the world had recorded some of their biggest falls since the terrorist attacks of 11 September.

Confidence restored?

As European markets opened on Monday, there was a more buoyant mood, with Paris, Frankfurt and London all making gains.

Market closing levels

New York: Nasdaq + 3.23% Dow Jones +2.25 London: FTSE 100, +2.7% Paris: Cac, +4.3% Frankfurt: Dax, +3.98%

By the end of the day, London's blue-chip FTSE 100 index was showing its biggest single-day gain since 13 November last year.

In Paris, the Cac 40 index managed its largest percentage rise of the year, while Frankfurt's Dax also performed strongly.

But analysts disagreed over whether the gains amounted to more than a limited bounce, fuelled by bargain hunting, after the low prices of last week.

"There's no guarantee that these gains are going to be held," said Jeremy Batstone, head of research at NatWest Stockbrokers in London.

Optimistic outlook

But Robert Arancio of Lehman Brothers in New York was more hopeful: "After weeks of selling, the selling pressure has dried up...People are more comfortable on a value perspective to buy and hold. They're starting to look past 2002 and look forward into 2003."

Wall Street's tech-weighted Nasdaq index climbed 3.23% to close at1,553.29 on Monday.

The Dow Jones Industrial average, meanwhile, put on 2.25% to finish at 9,687.42.

Debate

The UK's Financial Secretary to the Treasury Ruth Kelly sounded a positive note.

She told BBC Radio 4's Today programme: "Clearly there are short term global uncertainties which are having an impact on stock markets around the world.

"But I must say that here in Britain we are cautiously optimistic about the outlook," she added.

Friday's sell-off was sparked by new worries about company profits in the United States.

Ms Kelly said the performance of US companies was one of the uncertainties affecting the outlook for the world economy.

But she said she thought growth worldwide would start to pick up and lead to a more balanced outlook.

Profit worries

The chairman of the London Stock Exchange, Don Cruickshank, said there was one main factor driving shares lower.

Last week's losses

London: FTSE 100, -5.9% Paris: Cac, -4.4% Frankfurt: Dax, -6.6% New York: DJIA, -1.2% New York: Nasdaq, -2.0% Tokyo: Nikkei, -4.5%

"It's anxieties about future earnings, particularly in the United States," he said.

Mr Cruickshank said that investors were also worried about company accounting practices, but he said these problems were being addressed.

The European markets' surge was in contrast to Asia, where Tokyo's benchmark Nikkei index closed down 2.35% at 10,664 points on Monday.