Global stocks rally sharply as credit market calms

Most Asian bourses followed Wall St higher. MSCI's index of Asia-Pacific stocks excluding Japan rose 1.84 percent.

The notable exception was Japan's Nikkei 225 index, which dipped 0.2 percent on some weak corporate results and political uncertainty after an upper house election defeat for the government at the weekend.

"Investors are finding it difficult to make moves because of earnings. More than 200 companies are set to report results on Tuesday," said Tsuyoshi Segawa, strategist at Shinko Securities.

In Europe, budget airline Ryanair was the top percentage gainer in Europe, soaring 11 percent after strong results, while drugmaker GlaxoSmithKline climbed 4 percent after a U.S. regulatory panel said one of its key drugs should stay on the market.

Lloyds TSB gained 3 percent after the bank announced its first dividend increase in five years and a rise in first-half earnings and the sale of its Abbey Life unit to Deutsche Bank for almost 1 billion pounds. Deutsche gained 2.7 percent.

Crude oil prices were steady about $77 per barrel and gold was slightly firmer at $665.55 per ounce.

(Additional reporting by Michael Urquhart in Singapore, Sitaraman Shankar, Toni Vorobyova, Natalie Harrison in London)