In Europe, the FTSE was up 115.38 points, or 2.7 percent, at 4,358.60, while Germany's DAX fell 9.90 points, or 0.2 percent, to 4,892.55. France's CAC-40 was down 0.60 point at 3,237.37.
While London was closed Monday for a public holiday, markets around the world posted heavy gains, most notably in Asia where some actually jumped over 5 percent and the U.S., where the Standard & Poor's 500 spiked 3.4 percent and moving the index into positive territory for 2009.
Wall Street was expected to give up some recent gains at the open as the U.S. government's stress tests into 19 leading banks - results of which could come later - are expected to show that several banks need more capital. Investors are particularly concerned about Citigroup Inc. and Bank of America Corp. A report in the Wall Street Journal Tuesday said about 10 of the 19 banks undergoing the tests will be instructed to boost their capital base one way or another.
Dow futures were down 23 points, or 0.3 percent, at 8,386 while the broader S&P futures dropped 4 points, or 0.4 percent, to 898.80.
Those losses, if they indeed materialize, would represent a modest dent on the recent uptick, which has been fueled by mounting hopes that the global economy may start to recover later this year. In particular a run of better than expected U.S. economic data have indicated that the worst of the recession in the world's largest economy may have run its course.
Stock markets usually rally around six to nine months before real evidence of an economic recovery.
However, many analysts think the markets may be overestimating the speed and scale of the economic rebound in the wake of the slight improvements seen in the economic news over recent weeks.
"Equity investors are rather like travellers lost in the desert," said Stephen Lewis, an analyst at Monument Securities.
"They come across a discarded water-bottle in the sands and are delirious with joy when they find they can squeeze out a few drops of liquid to slake their thirst," he added.
Attention later will turn to U.S. Federal Reserve Chairman Ben Bernanke, who will testify before Congress about the Fed's strategy to to get banks lending freely again and stimulate the economy. He is likely to point to the fact that the three-month dollar interbank lending rate fell below 1 percent for the first time ever earlier as a sign that the Fed's aggressive stance is beginning to reap dividends.
Earlier in Asia, Hong Kong's benchmark Hang Seng index flitted in and out of positive territory to end the day up 49.03 points, or 0.3 percent, at 16,430.08. Mainland China's benchmark Shanghai Composite Index also edged up 0.3 percent to a nine-month high close of 2,567.34, as property shares fed expectations that the economy may be poised for recovery.
Australia's main index climbed 0.2 percent to 3,890.40, while Singapore's Straits Times index rose 2.3 percent.
Financial markets in Japan, South Korea and Thailand were closed for national holidays.
Oil prices declined modestly, but lingered around $54 a barrel on general optimism about the global economy. Benchmark crude for June delivery was down 48 cents to $53.99 in electronic trading on the New York Mercantile Exchange.
In currencies, the dollar rose to 98.91 yen from 98.85 late Monday in New York, while the euro fell to $1.3394 from $1.3419.
----
AP Business Writer Elaine Kurtenbach in Shanghai contributed to this report.
Morey money-related links:
Get Action News on your website
