North American markets had sharp gains during a volatile day of trading Tuesday, with the Toronto Stock Exchange surging by more than 400 points as investors bought up recently devalued stocks at bargain-basement prices.
The S&P/TSX composite index closed on Tuesday with a 438.3-point gain, or 3.76 per cent, to settle at 12,109.26.
The Dow Jones industrial average in New York had a shaky afternoon but jumped again in the final hour of trading, gaining 429.92 points, or 3.98 per cent, to finish at 11,239.77. The S&P 500 was up 53.07 points, or 4.74 per cent, to settle at 1,172.53 points. And the Nasdaq composite index rose 124.83 points, or 5.29 per cent, to finish at 2,482.52.
The markets suffered major losses the previous day that sparked fears of a second U.S.-led recession. The U.S. Federal Reserve announced on Tuesday afternoon that it will keep interest rates at a record low, and expects to keep its key interest rate near zero through mid-2013.
BMO deputy chief economist Doug Porter told The Canadian Press that the Federal Reserve's announcement means the bank of Canada will likely keep its key overnight rate target at one per cent into next year.
The loonie was up 1.24 cents Tuesday to 102.16 cents US, after briefly falling below parity earlier in the day.
Oil prices fell $2.01 to close at US$79.30 per barrel which is hard on the Canadian equities market but has an overall positive effect on both the U.S. and Canadian economy.
Though the Toronto market bounced back up on Tuesday, the market remains down about 15 per cent from its high for the year set in April.
Pension funds and individual investors have seen their holdings take a hit in the recent turmoil.
Prime Minister Stephen Harper said on Tuesday during a trip to Brazil that Canadians shouldn't focus on the day to day market fluctuations.
"What really matters is what we are doing here and that is focusing on mid-term and longer-term opportunities to create wealth, to create trade, to create enterprise, to create jobs," he said. "That is what is really important."
Asian-Pacific markets rose sharply as markets opened Wednesday. Australia's S&P/ASX200 index rose 3 per cent to 4,214 points, while New Zealand's NZX50 was up almost 4 per cent by midmorning.
Japan's Nikkei 225 was up 1.4 per cent to 9,073.37 as markets opened on Wednesday morning.
In Europe, Germany's DAX was down 5.2 per cent by mid-morning local time while France's CAC-40 was down 3.4 per cent and Britain's FTSE 100 index was down 3.6 per cent on Tuesday.
Middle East economies also suffered on Tuesday as oil prices tumbled. Saudi Arabia had lost 3.6 per cent by mid-morning local time, while Egypt saw a drop of 4.5 per cent.
With files from The Canadian Press and The Associated Press
