US and European stock investors have bought beaten-down shares, at least temporarily looking past another steep drop in oil prices that briefly sent US crude below $US30 a barrel.
Major US stock indexes finished strong in a volatile trading session on Tuesday. The pan-European FTSEurofirst 300 index climbed 1.1 per cent after four sessions of declines.
Volatile Chinese markets and the deepening oil slide have shaken sentiment in equities at the start of 2016. China stocks closed higher on Tuesday as the central bank tried to stabilise the yuan.
But oil prices slumped more than 2 per cent, failing to sustain an initial rally and deepening a 1-1/2-year slide.
Tuesday's rally may indicate that equity investors are setting aside oil and China as the main factors driving share prices, said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
"As the focus becomes more on the upcoming earnings ... the focus turns away from China and oil, it allows investors to redeploy their assets into some equities that look reasonable," Kuby said.
The Dow Jones industrial average rose 117.65 points, or 0.72 per cent, to 16,516.22, the S&P 500 gained 15.01 points, or 0.78 per cent, to 1,938.68 and the Nasdaq Composite added 47.93 points, or 1.03 per cent, to 4,685.92.
Shares of Apple rose 1.5 per cent after a broker upgrade, helping prop up Wall Street equities. After historically poor starts to the year for major US indexes, investors were awaiting corporate earnings season to start in earnest later in the week, with large banks due to report.
"We saw a big decline in American markets," Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts. "Now, we have seen it be pretty much stable. I think at this point perhaps we stabilise unless we see another down leg from China."
In Europe, solid corporate updates from retailers boosted shares.
MSCI's broadest gauge of stocks globally rose 0.3 per cent after eight straight down sessions.
US crude prices fell as low as $US29.93 before settling down 3.1 per cent at $US30.44 a barrel. Benchmark Brent settled down 2.2 per cent at $US30.86 a barrel. US crude prices have fallen 17 per cent in 2016 alone.
Oil has been dragged lower by a glut, China's weakening economy and stock market turmoil, as well as the strong US dollar, which makes it more expensive for those using other currencies to buy oil.
"The momentum is too strong to the bearish side, even if fundamentally nothing has changed," said Dominick Chirichella, a senior partner at Energy Management Institute.
The US dollar rose for a third straight session as gains on Wall Street and calmer financial markets enhanced appetite for currencies that offer higher yield.
The US dollar rose 0.3 per cent against a basket of currencies. The euro slipped 0.06 per cent against the US dollar.
US Treasury prices rose in choppy trading as oil prices resumed their decline, increasing appetite for safe-haven US government debt.
Benchmark 10-year US Treasury notes rose 13/32 in price to yield 2.112 per cent, from 2.158 per cent late on Monday.
Spot gold dropped 0.4 per cent, falling for a third straight session, but the safe-haven metal pared earlier losses.