Global stocks rose Wednesday following signs that China would do more to stimulate its slowing economy.
Stock markets have been volatile over the past several weeks as investors attempt to gauge the impact of China's slowing economy on global growth.
But investor sentiment improved Wednesday following an announcement from China's finance ministry on Tuesday evening that the country would roll out a "more forceful" fiscal policy to boost its economy.
U.S. stock futures pointed to 1.2% opening gains for the Dow Jones Industrial Average and 1.1% gains for the S&P500. Changes in futures aren't necessarily reflected in market moves following the opening bell. The pan-European Stoxx 600 was up 2.0% in late morning European trading.
In Asia, Japanese stocks posted their biggest daily gains since 2008 in percentage terms, rising 7.7%. In points terms, it was the biggest gain since 1994 and came after Japanese stocks dipped into negative territory for the year on Tuesday.
"The idea that China slowing should create a global recession was wide of the mark," said John Bilton, global head of multiasset strategy at J.P. Morgan Asset Management, adding that reassuring comments from global policy makers should help markets stabilize after what was an "ugly month" for investors in August.
China's Ministry of Finance said in a statement Tuesday evening that it would allocate more funds to support some infrastructure projects and implement tax cuts for small businesses. It also said it would accelerate the approval process for duty-free stores to boost construction.
"Authorities [have] released many policies aimed at rebuilding investor confidence," said Jacky Zhang, an analyst at BOC International.
In Europe, Germany's exporter-heavy DAX index, which is sensitive to Chinese demand, was up 1.7%, while France's CAC 40 was up 2.4%.
In Asia, China's Shanghai Composite Index closed up 2.3%, while Hong Kong's Hang Seng Index gained 4.1%, building on solid gains for U.S. stocks Tuesday.
Mr. Bilton said that there were good buying opportunities in markets currently, highlighting the recent falls in Japanese equities and that U.S. stocks remain in negative territory the year, but he said investors would remain cautious ahead of the U.S. Federal Reserve's policy meeting next week.
Others investors questioned whether the rally had legs.
"Investors are getting as jumpy on the upside as they are on the downside," said Paul O'Connor, co-head of multiasset at Henderson Global Investors, which oversees £82.1 billion in assets.
Mr. O'Connor said China hadn't provided enough clarity over its policy response to the country's economic challenges. He expects markets to remain volatile and is maintaining cash levels in his funds at their highest levels in around five years.
"China is where the big policy decisions need to be made that will shape the next few quarters and few years. We're getting to a stage where the Fed is no longer the main game in markets," said Mr. O'Connor.
The U.S. Federal Reserve will decide whether to raise interest rates at its two-day meeting starting Sept. 16.
Raising rates would begin to unwind years of easy-money policies in the U.S., which have provided support for financial markets across the globe.
Economists had expected the Fed to raise interest rates at its September meeting before the recent selloff in global markets. The Fed has left the door open to rate rises next week, but many economists have put back their calls until December or early 2016.
"The question is whether this relief rally has come too late for the Fed board members to change their views and raise interest rates next week in light of the high volatility in August," said Alessandro Tentori, a rates strategist at Citigroup, who said there is "still room" for a rate rise in September.
Emerging market currencies, which have been battered since China growth fears sharpened, rallied Wednesday. The Russian ruble rose 0.6% against the U.S. dollar, the Turkish lira was up 0.1%, and the South African rand 0.6%.
The euro fell 0.3% against the buck to $ 1.1179. The dollar rose 0.5% against the Japanese yen.
The yield on haven 10-year U.S. Treasurys rose slightly to 2.22%. Yields rise as prices fall.
Brent crude oil was down 0.1% at $ 49.47 per barrel, while gold was flat at $ 1121.60 an ounce.
Chao Deng contributed to this article.
Write to Christopher Whittall at christopher.whittall@wsj.com
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