Portugal Colonial - Markets climb as calm returns after sharp selloff

Wall Street burst higher at the open after a three-day holiday weekend, the Dow surging 1.5 percent while the broad-based S&P 500 gained 1.9 percent and the tech-heavy Nasdaq shot up 2.4 percent.

European equities were up for a second straight day in afternoon trading but pared down some of their gains from the morning.

Oil prices extended gains on hopes of improving energy demand in key consumers China and the United States, while the euro climbed on the prospect of rising eurozone borrowing costs.

"Risk appetite has managed to recover for now, perhaps because we get a much needed-break from central bank decisions this week," IG analyst Chris Beauchamp told AFP.

"But while a bounce is overdue, it is probably only temporary."

There remains an overarching sense of gloom as traders speculate that the sharp lift in borrowing costs around the world will tip economies into recession.

The focus this week is on Federal Reserve boss Jerome Powell's two days of testimony to lawmakers in Washington, which will be closely watched for clues regarding the bank's plans for fighting surging consumer prices.

"Where we go from here depends largely on whether Federal Reserve Chair Powell spooks the markets with his pre-released comments and what inflation data from the UK shows tomorrow (Wednesday)," City Index analyst Fiona Cincotta told AFP.

The Fed announced a three-quarter percentage point interest rate hike last week, after inflation data days earlier had smashed forecasts and hit a four-decade high.

Several officials -- including at the Fed, Bank of England, Reserve Bank of Australia and European Central Bank -- have come out in recent days to flag a further tightening of borrowing costs.

Inflation has rocketed to multi-decade highs around the world on a host of factors, including the global supply crunch and the Ukraine conflict, which has fuelled strong gains for food and energy prices.

"These small recoveries in stock markets shouldn't provide any comfort," said Craig Erlam, senior analyst at OANDA trading platform.

"Recession is increasingly becoming the base case and so equities are vulnerable to further losses," he said.

- Key figures at around 1335 GMT -

New York - Dow: UP 1.5 percent at 30,320.71 points

London - FTSE 100: UP 0.3 percent at 7,140.45

Frankfurt - DAX: UP 0.2 percent at 13,297.77

Paris - CAC 40: UP 0.9 percent at 5,971.11

EURO STOXX 50: UP 0.6 percent at 3,489.08

Tokyo - Nikkei 225: UP 1.8 percent at 26,246.31 (close)

Hong Kong - Hang Seng Index: UP 1.9 percent at 21,559.59 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,306.72 (close)

Euro/dollar: UP at $1.0547 from $1.0511 late Monday

Pound/dollar: UP at $1.2282 from $1.2253

Euro/pound: UP at 85.90 pence from 85.78 pence

Dollar/yen: UP at 136.21 yen from 135.07 yen

Brent North Sea crude: UP 1.1 percent at $115.38 per barrel

West Texas Intermediate: UP 1.9 percent at $110.07

burs-lth/jj

F.Carias--PC