U.S. stock markets staged a late rally on Wednesday, with the major indexes all posting gains. Asian markets also rebounded, reversing a two-day free fall as investors welcomed the U.S. Federal Reserve's bold three-quarter percentage point cut to its benchmark rate. But major European stock indexes did not fare as well one day after the central bank's surprise move. VOA's Mil Arcega reports.

A man walks past a bank displaying the movements of the Hang Seng Index on an electronic board of the Hong Kong Stock Exchange in Hong Kong, 24 Jan 2008

News of the U.S.central bank's rate cut was the top story in financial markets around the world. In Mumbai, Indian shares rebounded from a two-day slide as the country's benchmark index rose more than seven percent.

By mid-day, Japan's Nikkei index had gained more than 400 points, ending the trading day up more than two percent.

"We have hopes that the decision [of interest rate cut by the U.S. Federal Reserve] will help sustain America's economic growth and global financial stability. We hope the impact is favorable to both the global and Japanese economy," said Matsuhige Ono, who is Japan's deputy chief cabinet secretary.

Share prices soared nearly 11 percent in Hong Kong, while indexes in Manila and Sydney gained about two percent.

But the markets showed more volatility in China. Despite closing three percent higher, a half-percent drop in the Shanghai Composite Index during mid-day trading prompted some analysts to look for additional cuts to the U.S. rate.

Anthony Espina, managing director at Goldride Securities in Hong Kong says, "Therefore, we expect the Federal Reserve to continue to cut interest rate very aggressively. We're looking for at least a quarter percent cut next week, and maybe even half a percent."

In Europe, the three quarter percent drop in the U.S. rate failed to produce the desired effect. Major stock indexes in Paris and Frankfurt declined sharply on fears that a slowing U.S. economy would cause world stock prices to fall.

U.S. Secretary of State Condoleezza Rice addressed those concerns at a gathering of the world's top political and business leaders in Davos, Switzerland. "The U.S. economy is resilient, its structure sound and its long term economic fundamentals are healthy. The United States continues to welcome foreign investment and free trade, and the economy, our economy, will remain a leading engine of global economic growth," Rice said.

Global markets are still awaiting the details of a $145 billion U.S. economic stimulus plan that is expected to be unveiled in about three weeks.