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Global stock markets rallied sharply on Monday, extending gains as positive comment from top central bankers and strong US housing market figures bolstered hopes the worst of the slump is finally over.
The gain brought many markets back to levels last seen in October last year, when the global financial crisis was at its height after the collapse of US investment banking giant Lehman Brothers.
Asia led the way, with Tokyo jumping 3.35 percent higher while Hong Kong added 1.67 percent and Sydney rose 3.16 percent, taking up from where Wall Street left off on Friday with a gain of 1.67 percent.
Dealers said that after some hesitation last week, investors opted for the optimistic view of events, taking US Federal Reserve Chairman Ben Bernanke at his word that "prospects for a return to growth in the near term appear good."
Bernanke, meeting other central bankers at a gathering in Jackson Hole, Wyoming, also voiced caution about the outlook, but the markets were looking to go up and ignoring the downside risks.
"While the bull market appears alive and well, we have growing concerns about the magnitude and speed of its most recent surge and believe that any negative surprises ... could trigger a sharp market pullback," said Frederic Dickson, chief market strategist for D.A. Davidson & Co.
In London, the FTSE 100 index of leading shares gained 0.93 percent to 4,896.26 points. In Paris, the CAC 40 rose 1.0 percent to 3,652.17 points and in Frankfurt, the DAX put on 1.04 percent to 5,519.75 points.
In New York, the blue-chip Dow Jones Industrial Average was up 0.65 percent at around 1600 GMT.
Dealers said that while many feel that the gains have been overdone given the still weak economic fundamentals, investors were now buying for fear of missing out on the rally, which in turn propels the markets even higher.
"We continue to have reservations about chasing stocks ... economic fundamentals aren't as strong as the stock market would have you believe," said Patrick O'Hare of Briefing.com.
Elsewhere in Europe, Amsterdam rose 1.15 percent, Brussels added 1.72 percent, Milan jumped 2.09 percent, Madrid was up 1.28 percent and Swiss stocks gained 0.89 percent.
Dealers said a key factor were figures on Friday showing US existing-home sales soared 7.2 percent in July -- the largest gain since records began in 1999 -- and well ahead of forecasts.
The report "encouraged expectations of a US housing recovery," said NAB Capital analyst John Kyriakopoulos.
A recovery in the stricken housing sector, whose collapse ultimately laid low the global financial system, is key to pulling the United States and then the rest of the world out of recession.
A 3.1 percent rebound in eurozone industrial orders in June also helped sentiment on Monday, encouraging investors to anticipate more good data, dealers said.
"The market is building on the optimism carried over from Friday and that is enough to keep it going," said one dealer in Paris.
"The market expects upcoming data to be good," he added.
