Tuesday's rally on Wall Street extended into early Wednesday trading in Asia, where stocks rose sharply. Japan's benchmark advanced almost 3 percent, and South Korea's Kospi advanced 3.2 percent. Markets in Singapore, Australia, Shanghai and New Zealand also traded higher.
Britain's FTSE 100 index on Tuesday closed 196.22 points, or 4.4 percent, higher at 4,639.50, while Germany's DAX was up 251.20 points, or 5.0 percent, at 5,278.04. France's CAC-40 was 163.12 points, or 4.6 percent, higher at 3,691.09.
In Latin America, stocks rallied for the second straight day, bolstered by gains on Wall Street and in Europe and renewed investor confidence after steep losses.
Argentina's Merval index led the pack, surging to close up 6.2 percent at 1,123.
Brazil's Ibovespa index closed up 5.2 percent to 40,252, while the nation's currency, the real, strengthened against the U.S. dollar.
Mexico's IPC also closed up 4.5 percent to 21,535. The peso, which has been battered in recent weeks, strengthened to 12.6 per U.S. dollar, compared with 12.8 the previous day.
Chile's IPSA index rose to close at 2.6 percent to 2,627, while Colombia's IGBC closed up 2.7 percent to 7,419.
The rise in risk appetite, evidenced in Tuesday's stock market rally, took its toll on the dollar, which plunged 3 percent against the euro, which is now trading at $1.3012. The dollar has been seen as a safe haven asset during the last few weeks of the financial turmoil.
That renewed dollar weakness fed through into the price of oil, which is priced in the U.S. currency. It spiked above $70 a barrel, a level above which it has not traded in nearly two weeks.
Light, sweet crude for December delivery rose $6.62 to settle at $70.53 a barrel on the New York Mercantile Exchange after rising as high as $71.77.
"It's very much a case that we are seeing risk aversion subsiding and the U.S. presidential election has probably added to a process already under way," said Ian Stannard, an analyst at BNP Paribas.
The willingness to take on additional risk has come even though investors know full well that whoever wins the election will have their work cut out to lift the U.S. economy out of recession.
Further proof of the scale of the downturn in the world's largest economy came earlier with the news that factory orders fell 2.5 percent in September from August, much worse than the 0.7 percent drop analysts had predicted.
"The next president is going to inherit the poisoned chalice of an economy entering a deep and prolonged recession and a soaring budget deficit that will rapidly reach levels not seen in a generation," said Paul Ashworth, senior U.S. economist at Capital Economics.
"Of course, this might also be a golden opportunity for the victor to turn things around and make his mark on history, much as Franklin D. Roosevelt did with the New Deal in the 1930s," he added. European stocks have been aided by a note from Morgan Stanley recommending European investors to buy stocks and has reversed its "full house sell signal" of June 2007 to a "full house buy signal". It had been one of the first major investment banks to look for the stock market exit door last year.
European shares have also been boosted by the ongoing decline in interbank lending rates ahead of expected interest rate reductions Thursday from the European Central Bank and the Bank of England.
Both banks are expected to follow the U.S. Federal Reserve's lead and cut interest rates by at least half a percentage point, though there's growing talk that the Bank of England may reduce interest rates by as much as a full percentage point for the first time since four cuts of that size in 1992-3 when Britain's economy was last mired in recession.
AP Business Writers Sarah Lepro in New York and Jeremiah Marquez in Hong Kong and AP Writer Jeannette Neumann in Buenos Aires, Argentina contributed to this report.