But a string of gloomy business news, including the collapse of a budget airline in Europe and a plunge in profits for Japan's Sony Corp. underlined the scale of the task facing policymakers in their efforts to revive confidence.

Hungary meanwhile became the latest recipient of an IMF rescue package after two of Western Europe's leaders called for international intervention to stop the crisis from infecting emerging economies in the east of the continent.

With the US Federal Reserve widely tipped to cut its key lending rate at the culmination of a two-day meeting in Washington, stock markets were already savouring the prospect.

Tokyo's Nikkei main index soared 7.74 percent by the close, Australian shares up 1.3 percent after falling back from strong early gains and Hong Kong's Hang Seng ended 0.8 percent higher.

In European opening trade, London surged 5.00 percent and Paris was up 6.70 percent while Frankfurt switched into a 0.22-percent gain, after an initial slump fuelled by a sharp fall in volatile Volkswagen shares.

"It appears that expectations for imminent interest rate cuts by the major central banks and some signs that the credit freeze is thawing overwhelmed more bad news on economic growth," said NAB Capital analyst John Kyriakopoulos.

"Central banks around the world are now taking more decisive monetary policy action to cushion the slump in economic activity."

The Hungarian stock market meanwhile surged 8.2 percent and the beleaguered forint currency rallied after the announcement of a 20 billion euro (25 billion dollar) bailout package for one of the countries worst hit by the global turmoil.

Out of the total, 12.5 billion euros has been pledged by the IMF, 6.5 billion from the European Union and a billion by the World Bank, the IMF said in a statement.

In a meeting in Paris on Tuesday, British Prime Minister Gordon Brown and French President Nicolas Sarkozy both called for international intervention to stop the financial crisis from infecting eastern Europe's emerging economies.

In Brussels, Economic Affairs Commissioner Joaquin Almunia said the European Commission was proposing to nearly double the maximum amount of EU aid that can be given to member states facing economic trouble to 25 billion euros.

Analysts said Hungary's vulnerability stemmed from a large current account and budget deficit, a partially overvalued currency, a low stock of foreign reserve and a high level of short-term foreign currency debt.

Lawmakers in Ukraine, another country that has also been badly affected, approved a package of legislation demanded by the IMF to release an emergency loan worth 16.5 billion dollars in the first of two readings.

The decision from the Fed was expected to be made at around 1815 GMT with financial markets banking on a half-point cut in the federal funds target to bring the rate to 1.0 percent, matching the lows of 2003 and 2004.

Some predicted the US central bank, which led a coordinated global rate cut earlier this month, could go even lower in an effort to jump-start lending.

In Tokyo, the Nikkei business daily said Japan's central bank was considering cutting its super-low interest rates by 25 basis points to 0.25 percent on Friday -- the first such move since March 2001.

China's central bank meanwhile decided to cut the benchmark one-year deposit rate by 27 basis points to 3.60 percent, the third such move in six weeks.

When China last cut interest rates early this month, speculation was ripe that the decision was made in coordination with other central banks, which also slashed rates at the same time.

In the latest gloomy economic news, Japan's Sony Corp. said its operating profit plunged 90 percent in the second quarter, hit by a surging yen, a weak global economy and intense price competition.

Europe's airline industry was also taking a hit with Denmark-based low-cost carrier Sterling Airways saying it would file for bankruptcy because its cash-strapped Icelandic owner was unable keep it airborne.

German titan Lufthansa also reported a 75-percent nosedive in net profit in the third quarter on Wednesday, blaming high fuel costs and weakened sales because of the credit crunch.

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