European shares ended higher on Wednesday ahead of a vote by the US Senate on a revised $US700 billion financial sector bailout plan.
The FTSEurofirst 300 index of top European shares closed 0.9% higher at 1,072.64 points. The index is down about 29% to date this year.
Banks rose the most after recouping some of their recent losses made on uncertainty over the US rescue package. But commodities stocks slipped.
Investors remained cautious as the US Senate prepared to vote on the revised plan aimed at halting the worst financial crisis since the Great Depression.
New economic data painted a bleak picture for the global economy: factory activity in the euro area showed the fourth consecutive month of contraction in September.
Britain's manufacturing sector put in its worst performance in at least 16 and a half years and a manufacturing in Japan turned negative for the first time since 2003.
US factory activity contracted for a second month in September.
Across Europe: the FTSE 100 index closed 1.2% higher at 4,959.59 points.
In Paris, the CAC 40 index rose 0.56% to 4,054.54 points; in Frankfurt, the DAX fell 0.42% to 5,806.33 points.
Markets in the Asia-Pacific on Wednesday clawed back some of the previous day's losses.
The New Zealand share market was up 97 points, or 3.1%, to close at 3188 on turnover of $130 million.
Telecom was up 9 cents to $2.82, while Contact Energy rose 12c to $7.94. Fletcher Building jumped 51c to $7.16.
Hallenstein Glassons was up 10c to $2.60 after it announced it had appointed an acting chief executive, following the departure of short-lived boss Shayne Quanchi. The Warehouse climbed 17c to $3.19.
PGG Wrightson was up 29c to $1.89, after announcing that extreme financial market conditions have prevented it from buying a 50% stake in Silver Fern Farms.
In the currency markets: at 8.25am on Thursday, the New Zealand dollar was trading at US67.28 cents,85.29 Australian cents, 37.96 pence, 71.24 yen and 0.4795 euro. The Trade Weighted Index was at 64.55.
The Australian stock market recouped almost all of its losses. At 1615 AEST on Wednesday, the S&P/ASX200 was up 194.1 points, or 4.22%, at 4794.6, while the All Ordinaries gained 183.2 points, or 3.96%, to 4814.5.
In Japan, share prices closed up 0.96%. The Tokyo Stock Exchange's Nikkei-225 index rose 108.40 points to end at 11,368.26, a day after sliding 4.1% to hit a three-year low.