Mumbai: After suffering the pain of a severe correction for more than a month, global equity markets are finally showing signs of a major pull back. Equity markets across the globe were in a highly oversold position and traders rushed to cover their short positions on the first signs of a recovery.

Most Asian markets closed with gains yesterday and Europe followed suit. Major European indices closed more than 2 per cent each higher while Russia gained more than 5 per cent. Helped by some statements from the US Fed chairman, US indices surged yesterday to close with their best single day gains in more than two years.

The Morgan Stanley Capital International (MSCI) World Index, which tracks major equity markets across the globe, had its biggest single day gain in more than two years yesterday.

In a public speech, Fed chairman Ben Bernanke sounded less concerned about inflation than earlier this month when he termed current US inflation rates as 'unwelcome'. He also said the US economy could withstand the negative impact of high oil prices.

Survey results indicated that new factory orders increased the fastest in many years in the US even though factory output showed a decline for the month of May. An unexpected drop in unemployment claims indicated a strong labour market. These helped ease concerns about a major slow down in the US economy.

The Dow index climbed back above 11000 and closed with gains of 1.8 per cent. NASDAQ, the worst performer among frontline US indices this year, soared 2.8 per cent.

Today, Asian indices have opened with significant gains. Malaysia and South Korea have gained more than 3.5 per cent each. Japan has bounced back more than 3 per cent and the Nikkei index is closing in on 15000.

Singapore has added more than 2.5 per cent and Hong Kong is trading higher by more than 2 per cent. Shanghai, which was the least affected in this round of correction, has gained over 1.5 per cent.