UPDATE 7:22 a.m. EST -- European markets continued to climb sharply Friday with London's FTSE 100 up 2.32 percent and Germany's DAX up 2.04 percent. Shares in France led the region after a slow start on the last day of trading for the week, with the CAC 40 up 3.28 percent.

In the U.S. stock futures on the Dow Jones index were up 1.3 percent, while on the S&P 500 they rose 1.34 percent and Nasdaq stock futures gained more than 1.72 percent. 

UPDATE 3:31 a.m. EST -- European markets opened up Friday with Germany's DAX index up 1.87 percent and leading the region’s bourses. The FTSE 100 gained 1.63 percent while France's CAC 40 was yet to show any movement in early trade.

In Asia, China’s Shanghai Composite rallied in the post-lunch session to finish 1.25 percent up from a trough while other Asian markets finished the day firmly higher. The Nikkei 225 climbed 5.88 percent while Hong Kong's Hang Seng was up 2.90 percent and South Korea’s Kospi was up 2.11 percent. India’s S&P BSE Sensex was trading up 1.94 percent in late-afternoon trade.

Original story:

Chinese stock markets lost early gains amid a rebound by other Asian stocks Friday. Chinese investors were left unimpressed by hints of policy stimulus in Europe and Japan, which prompted crude oil futures to rise by their most in three months Thursday.

The Benchmark Shanghai Composite index was down 0.28 percent by lunch, after a shallow bounce in early trade Friday. The Shenzhen Stock Exchange and China’s Nasdaq-style Chinext Index were also down by a little more than 0.63 percent.

After sharp falls in its major indexes Thursday, Chinese Vice President Li Yuanchao, speaking at the World Economic Forum in Davos, assured investors that Beijing would use regulations to prevent volatility in a market that was "not yet mature," Reuters reported.

The Shanghai Composite has lost more that 18 percent this year, while trading volumes in January have been about a third of typical levels last year, underscoring lack of investor appetite for the market.

Elsewhere in Asia, post a turbulent week that saw it entering bear market, the Nikkei 225 surged 5.81 percent higher — tracking an overnight rally in crude oil prices and modest gains by U.S. markets. Hong Kong’s Hang Seng Index was up 2.55 percent while India’s S&P BSE Sensex rose 1.57 percent. South Korea’s Kospi and Australia’s S&P ASX 200 were both up by more than a percent Friday as markets were given some breathing space when the European Central Bank (ECB) hinted of more monetary policy easing Thursday.

Citing concerns over China and emerging markets, volatility in financial and commodity markets and geopolitical risks, ECB President Mario Draghi said the turmoil would prompt a review of monetary policy in March.

The euro fell below $1.08 for the first time in two weeks during his speech, according to reports.

Brent crude, the global oil-price benchmark, gained 5.1 percent to $29.29 a barrel Thursday while West Texas Intermediate, the U.S. benchmark, settled up 4.16 percent at $29.53 a barrel, after sinking to a 13-year low Wednesday.

Traders, however, remain skeptical about a meaningful turnaround for either crude oil or stocks. “I don’t think the downside is done,” Peter Tuchman, floor broker for Quattro M. Securities, told the Wall Street Journal. “The market just cannot sustain a rally.”