US shares have ended the day mainly lower ahead of a key vote in the US Senate on a revised version of the $700bn Wall Street rescue plan.
European stocks mainly rallied on investor optimism that the US Senate would approve a revised plan that could prevent fresh economic chaos.
Dublin's ISEQ index closed 2.5% higher at 3,641, with the banking stocks gaining between 10.5% and 8%. London's FTSE closed 1% higher.
The US Senate is expected to vote as soon as this evening on a revised bailout, after the House of Representatives sparked renewed market turmoil by rejecting the original package.
Senate leader Harry Reid of the Democrats said he had received unanimous backing to table a vote on the bank bailout bill.
Attached to the bill will be tax breaks for business and alternative energy projects. It also includes a provision to raise the level of government guaranteed deposit insurance.
But for the bill to become law it must return to the House and be passed there.
It is still far from clear if the extra provisions attached in the Senate version will be enough to persuade sceptical lawmakers in the House who remain opposed to the plan.
Stocks on Wall Street rallied last night on the expectation that the US government would eventually pass a rescue package.
Asian stocks rose today after the powerful rally overnight on Wall Street.
Many of the region's markets were shut for public holidays, but those that were open took their cue from New York where the Dow Jones index posted its third-largest single-day point gain, a day after its worst loss.
But gains in Asia were limited by ongoing doubts about the plan.
Tokyo posted an almost 1% rise after hitting a three-year low the day before, while Sydney was up 4.2% and Taipei 0.78%. However, lingering uncertainty in Seoul led the index down 0.58%.
Dealers said the chorus of concern following US lawmakers' rejection of the Treasury's proposed bank bailout package on Monday had raised hopes that a new package can be thrashed out and approved within the coming days.
Wall Street's Dow Jones Industrial Average leaped 485.21 points (4.68%) to close at 10,850.66 yesterday.
The Bank of Japan announced just before the opening bell that the nation's business confidence had fallen to the lowest level in five years in September as Asia's largest economy skirts recession.
The Japanese central bank pumped emergency funds into the short-term money market for an 11th business day to try to ease strains on the financial system, adding 800bn yen (€5,344bn) in the morning.
