European stock markets closed higher on Tuesday, getting a boost from a rebound on Wall Street.
Investors hope another vote on $US700 billion financial bailout package will pass the plan.
Shares fell by almost 7% on Wall Street on Monday when the proposed was voted down by the US House of Representatives, 228-205. Monday was the market's blackest day in 20 years.
However, Wall Street is up on Tuesday: the Dow Jones industrial average was up 2.7% and Standard & Poor's 500 index was up 3.5% in late morning trading.
In London, the FTSE 100 index of leading shares finished with a gain of 1.74% at 4,902.45 points.
The Paris CAC 40 rose 1.99% to 4.032.10 points and Frankfurt's DAX added 0.41% to 5,831.02 points.
Dealers said the hope was that the US rescue plan will eventually get through.
But global money markets remained frozen, and London interbank offered rates shot to record levels, indicating banks were not lending to each other.
The rate for overnight dollar loans rose to nearly 6.9% from just over 2.5% on Monday.
Meanwhile, Dexia became the latest European bank to need a state bailout with Belgium, France and Luxembourg investing 6.4 billion euros into the group.
President George Bush has warned lawmakers opposed to the bailout plan that the threat to the US economy "will grow worse each day" that goes by without a deal.
He said that action had to be taken.