European stock markets rallied strongly this evening amid a wave of investor optimism that the global economic downturn is over the worst and that a tentative recovery is underway in major economies.

London's FTSE rose 1.6% to close at 5,124, with Tullow Oil jumping 9% to £11.87 after news of a new oil find in Africa. Next climbed almost 7% to £18.16. The Paris CAC gained 1.5% to 3,807, while the Frankfurt DAX added 1.3% to 5,700.

In Dublin, the ISEQ ended 55 points higher (1.7%) at 3,364. AIB ended down 2.4% at €2.63 but Bank of Ireland gained 3.2% to €2.87. The market was closing just as Finance Minister Brian Lenihan was giving details of the amounts NAMA would pay the banks for their loans. But there were strong gains elsewhere, with C&C up 7.5% to €3 and Paddy Power gaining 7.6% to €21.37.

Wall Street extended its gains as the positive mood in Europe and Asia helped keep upward momentum following upbeat economic comments from Federal Reserve chief Ben Bernanke. The Dow Jones was up 0.8% to 9,764, while the Nasdaq was 1% higher at 2,125.

Earlier, Tokyo's Nikkei 225 index closed 0.5% higher at 10,271, while the Hang Seng jumped 2.6% to 21,403.