LONDON, Dec 2: European and US stocks rose on Tuesday in a technical rebound after heavy losses the previous day as concerns mounted that the global economy faces a long and painful recession.

In London, the FTSE 100 index of leading shares closed 1.41 per cent higher at 4,122.86 points. In Paris, the CAC 40 was up 2.35 per cent at 3,152.90 points and in Frankfurt the DAX jumped 3.12 per cent to 4,53.79 percent.

In the US, the Dow Jones Industrial Average rallied 2.92 per cent to 8,387.39 at 1655 GMT, coming off a horrific 679-point loss on Monday.

Russian stocks closed up 2.15 per cent, the Spanish market won 3.81 per cent and Italian stocks gained 0.95 per cent.

Volatile trading conditions showed no signs of abating.

“As we are in the midst of the largest market fall since the Great Depression, it’s an understatement that the outlook is extremely uncertain,” said European equity strategists at JP Morgan.

Investors are looking to central banks this week for the latest round of action to combat the worst financial crisis since the 1930s which is threatening to plunge the global economy into recession. Official data showed on Tuesday that eurozone producer prices fell at their sharpest rate on record in October following another big drop in energy costs, raising the odds of a large interest rate cut for the eurozone on Thursday.

Analysts say the cut in the benchmark rate by the European Central Bank could be between 0.50 and 0.75 percentage points from its current 3.25 percent.

“We still think that interest rates (ECB) will fall to 1.5 percent next year and stay there for a prolonged period,” said Ben May, European Economist at Capital Economics in London.

As well as the ECB rate meeting, traders were anticipating a big cut to British borrowing costs when the Bank of England gathers on Thursday.

European shares on Monday, which dashed hopes of a sustained recovery in prices after a strong week last week.

Wall Street stocks gave back most of their gains from the past week on Monday when the Dow Jones Industrial Average sank 7.70 per cent, the Nasdaq composite plummeted 8.95 per cent and the broad-market Standard & Poor’s 500 index sank 8.93 per cent.—AFP