NEW YORK, March 18: Global stocks rebounded on Tuesday on relief over better-than-expected profit reports by two Wall Street banks, but the dollar weakened ahead of a Federal Reserve meeting where US interest rates were likely to be slashed.

US and European stocks also jumped on hopes a Fed rate cut would help ease a global credit crisis that on Sunday claimed investment bank Bear Stearns, a fall that had caused equity markets to tumble and investors to seek safe-haven assets.

The Dow industrials on

Tuesday jumped close to 300 points, with all major US stock indexes rising more than two per cent.

In Europe, benchmark indexes closed up more than three per cent.

Rises in financial shares drove gains on both sides of the Atlantic.

Rising stocks sapped the safe-haven bid for government debt, and oil prices rose on expectations a Fed rate cut will further weaken the US dollar and spur investor demand for crude.

US home financing companies Fannie Mae and Freddie Mac and encourage them to boost spending in the slumping US housing market also helped ease investor jitters.

Shares of Fannie were up 19.81 per cent at $26.61, while Freddie Mac shares were up 19.3 per cent at $24.60.

The Dow Jones industrial average jumped 2.14 per cent to 12,228.78 and the Standard & Poor’s 500 Index 2.60 per cent, to 1,309.83. The Nasdaq Composite Index gained 2.27 per cent to 2,226.38.

In Europe, banking stocks that have been hammered in recent days also led the rebound, UBS up 14.4 per cent, Credit Agricole up 9.3 per cent and Deutsche Bank up 6.3 per cent.—Reuters