European stock index futures rose sharply Tuesday after Asian shares rebounded from multi-month lows and as the euro clung to gains on hopes that euro zone officials will act to contain Greece's debt woes and prevent a financial meltdown.

Financial stocks and global miners were among the biggest gainers in Asia, although some market players cautioned against undue optimism that European leaders were finally coming to grips with a protracted solvency and liquidity crisis.

It's a knee-jerk reaction to the world failing to come to an end last night, Richard Morrow, director at Melbourne-based pivate client stockbroker E.L. & C. Baillieu, told Reuters. It is a reversal and I don't see it lasting. The market has been as gloomy as I can remember since the last days of 2008.

After three sessions of steepening falls and wild swings on commodities markets, oil, copper, gold and silver all rose. U.S. crude jumped nearly $2 a barrel.

The dollar, U.S. Treasuries and Japanese government bonds, currently safe haven assets of choice, all eased.

Euro STOXX 50 index futures rose 2.7 percent. Futures for Germany's DAX and France's CAC-40 also rose more than 2.5 percent, while financial spreadbetters called the FTSE 100 <.FTSE> to open up as much as 2.2 percent.

Turbulence on global markets since late July has been driven by investors' twin fears of renewed recession in the United States, and the chaos that Europe's sovereign debt crisis could inflict on the financial system if it continues unchecked.

European Central Bank policymakers said on Monday that officials were working to increase the firepower of the region's rescue fund in their latest effort to staunch a crisis that U.S. President Barack Obama said was scaring the world.

U.S. markets reacted positively, finishing more than 2 percent higher on Monday <.DJI> <.SPX>, and the mood continued in Asia, where Tokyo's Nikkei <.N225> rose 2.8 percent, coming off its lowest close in more than two years.

S&P 500 index futures rose 0.4 percent.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> rose 4.5 percent, after plumbing its lowest level in 16 months on Monday. The index is down 26 percent from its 2011 high in April.

UBS analysts said fund flow data showed foreign money managers had pulled money out of Asia ex-Japan markets last week and predicted more selling by funds looking to send money back to Britain, the United States and Europe.

RATE REVERSAL

Expectations have been rising among market economists that Greece will be forced soon to default on its massive debts, with uncertain consequences for both the exposed European banking sector and other struggling euro zone nations.

There is also concern that, whilst Europe's rescue vehicle has been able to cope with bailing out Greece, Portugal and Ireland, its resources would be overwhelmed if a bigger nation such as Italy or Spain were to need help.

Senior ECB officials confirmed the 440 billion euro rescue fund would likely be increased in size, and there were also hints from policymakers that the central bank could cut interest rates next month, reversing a hike earlier this year in a move already expected by markets.

Markets are getting more confident around some action plan in Europe, which is positive, but on the other side, markets are also looking for more policy easing from the ECB, which is negative, said Greg Gibbs, currency strategist at RBS in Sydney.

The combination of both will leave the euro caught in the middle somewhere.

The single currency traded around $1.3545, up about 0.1 percent on the day, after rallying from an eight-month low of $1.3360 on Monday. The dollar eased 0.6 percent against a basket of currencies.

JGBs LOWER

Gains in equities and other riskier assets knocked Japanese government bonds lower, with the benchmark 10-year yield rising 2 basis points to 0.995 percent.

The 10-year U.S. Treasury yield edged up to 1.907 percent, having risen from a more-than-60-year low at 1.674 percent last Friday.

The improved sentiment also helped credit markets, with spreads tightening on the iTraxx benchmark index of investment grade Asia ex-Japan corporate bonds.

Commodities were helped by a weaker dollar, which makes assets priced in the U.S. currency cheaper for holders of other currencies.

Brent crude oil rose 1.4 percent to $105.41 a barrel and U.S. crude gained 2.3 percent to $82.06.

Clarity on the euro zone plan is still key, crude prices are swinging back and forth depending on what comments come out of Europe, said Victor Say, an analyst with Informa Global Markets in Singapore.

Commodities have also been boosted by a weaker dollar and short covering after the recent sell-down.

Copper, which ended Monday up 2 percent after falling more than 6 percent at one stage, rose another 2 percent on Tuesday to $7,409.75 a tonne.

Gold, which has been hammered in recent days by selling by hedge funds to cover losses elsewhere in portfolios, rose 1.3 percent to around $1,648 an ounce.

(Additional reporting by Cecile Lefort in Sydney and Victoria Thieberger in Melbourne; Editing by Neil Fullick)