Hopes for another Fed rescue drive 3% rally

US stocks shot 3 percent higher on Tuesday on speculation Federal Reserve Chairman Ben Bernanke this week would signal new help for the economy, giving investors hope a four-week rout was nearing an end.

The Dow Jones industrial average was up 322.11 points, or 2.97 percent, at 11,176.76. The Standard & Poor's 500 Index was up 38.53 points, or 3.43 percent, at 1,162.35. The Nasdaq Composite Index was up 100.68 points, or 4.29 percent, at 2,446.06.

European shares extended their low-volume bounce into a second day, led by demand for defensive stocks and investor hopes for a further easing of US monetary policy, although tepid economic data did little to allay fears of recession.

The index's intraday journey, however, showed a marked lack of conviction among bulls, with volatile trade once again the name of the game and the FTSEurofirst 300 moved in a 23 point range over the session.

The Nikkei average rose more than 1 percent, rebounding from a sharp drop the previous day, as appetite for domestic-demand shares such as food makers and paper firms offset concerns about the economies of key export markets and the impact of a strong yen.