The Asian recovery from heavy losses the previous day was relatively modest and dealers said it was driven largely by technical factors, with sentiment still cautious following a recent flood of grim economic data.

Tokyo closed up 1.79 per cent, Hong Kong climbed 1.4 per cent, Sydney edged up 0.2 per cent and Seoul ended flat.

In late morning trading in Europe, London was down 0.89 per cent, Frankfurt shed 2.13 per cent and Paris lost 1.92 per cent.

'Equity markets continue to gyrate,' said Barclays Capital analyst Laurent Fransolet. 'The news continues to be mixed, but the responses of various authorities seem to be viewed a bit more positively.'

Wall Street snapped back on Tuesday from a brutal session a day earlier, with sentiment lifted by a better-than-expected outlook from General Electric and hopes for a US rescue for ailing Detroit automakers, traders said.

'The market continues to be influenced by US stocks, reversing recent losses slightly after the Big Three (carmakers) put forward their revamp plans,' said Mr Hideaki Higashi, a strategist at SMBC Friend Securities.

Mr Higashi however said automakers Chrysler, Ford and General Motors still faced a bumpy road to clear negotiations with Congress before they get a bailout.

'The rescue plan could be diluted from what they want,' he warned.

'There are calls for the management to take responsibility and protect payrolls in the auto sector, which is considered the soul of America, unlike financial companies,' he said.

Wall Street, which reopens at 1430 GMT (10.30pm Singapore time), was also boosted overnight by General Electric's better-than-expected business update.

The Dow Jones Industrial Average rallied 3.31 per cent, the tech-heavy Nasdaq composite climbed 3.70 per cent, and the Standard & Poor's 500 added 3.99 per cent after shedding more than eight percent on Monday.

European stocks meanwhile fell Wednesday despite news that finance ministers from all 27 European Union nations endorsed plans for a stimulus package totalling 200 billion euros (S$397.7 billion), equivalent to 1.5 per cent of EU gross domestic product.

Investors are looking to central banks this week for the latest round of action to combat the worst financial crisis since the 1930s and which is threatening to plunge the global economy into recession.

The European Central Bank and the Bank of England are both widely expected to slash interest rates on Thursday.

Economic news remained gloomy. Australia's economy grew just 0.1 percent in the third quarter, the slowest pace in eight years, official figures showed.

'It is difficult to see the rally in equities being sustained and it will not take much in the way of more bad economic news to bring a dose of reality back,' warned analysts at the Calyon investment bank. -- AFP