World stocks higher 2nd day running

European and Latin American markets posted solid but not spectacular gains following a record rise in Japan, where markets were playing catch-up after a holiday Monday.

Wall Street initially marched higher on the U.S. government's plan to pump $250 billion into banks and shore up the country's financial system. But the Dow Jones industrial average ended the day down 76.62 points, or 0.82 percent, at 9,310.99 as investors cashed in some of their profits from the Monday's record-breaking 936-point rise.

"This is a natural market in play after such a momentous rise yesterday," said Howard Wheeldon, senior strategist at BGC Partners.

In London, the FTSE 100 index of leading shares closed up 137.31 points, or 3.2 percent, at 4,394.21 despite news that inflation in Britain is running at a 16-year high. Germany's DAX was up 136.74, or 2.7 percent, at 5,199.19 even though a group of leading German economic think tanks said Tuesday that Europe's largest economy is on the "brink of a recession."

The CAC-40 in France was 97.02 points, or 2.8 percent, stronger at 3,628.52.

The gains in Europe followed the strongest daily performance in history on Japan's benchmark Nikkei 225 index, which surged 1,171.14 points, or 14.15 percent, to close at 9,447.57.

The resurgence in the markets follows unprecedented government efforts to bring an end to the financial crisis that has threatened the outlook for the whole global economy.

So far, government actions appear at the least to be boosting confidence in the financial markets.

The U.S. became the latest to announce plans buy stakes in its banks.