Worries about China's economy, with news of a severely shrinking trade surplus, were also set aside in a general spree of bargain hunting.
MSCI's all-country world index was up 0.8%, adding to a 5% gain on Tuesday. The U.S. S&P 500 index alone gained nearly 6.4% Tuesday.
Sentiment in Europe was shaken early by UBS, which said its 2008 net loss had risen to $18.06 billion. But it later recovered with investors looking for oversold equities, particularly in the banking sector.
"The market has been latching on to the idea that financials have priced in the worst. The market has digested UBS and decided they are not as bad as expected," said Bernard McAlinden, strategist at NCB Stockbrokers.
The pan-European FTSEurofirst 300 was up 0.8%, after earlier being down around 1%. It gained more than 5% on Tuesday.
Markets have entered a period of volatile trading in which good or bad news -- particularly about banks -- triggers sharp reactions almost daily. Tuesday's gains, for example, were set off by Citi (C, Fortune 500) saying that it was profitable in the first two months of the year.
0:00/3:04Unemployment's global impactEarlier, Japan's Nikkei average jumped 4.6%, a day after hitting a 26-year closing low. The benchmark gained 321.14 points to 7,376.12 while the broader Topix rose 2.7% to 722.28.
Up and downThe dollar has also been swinging up and down on short shifts in sentiment. It was down slightly against a basket of major currencies after earlier gaining around a quarter of a percent.
The currency was initially lifted by safe haven flows after data showed China's trade surplus shrank to $4.84 billion in February. This was much lower than forecasts of a $27.3 billion surplus, and exports slid 25.7% on a year ago.
Later, the euro rose 0.4% on the day to $1.2718, having touched a two-week high of $1.2823 on trading platform EBS on Tuesday.
On euro zone government debt markets, the 10-year cash Bund yield was up 7 basis points at 3.067%. The interest rate-sensitive two-year Schatz yield was up 3 basis points at 1.357%. Bond yields move inversely with prices.
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