Upbeat trading across the globe follows speculation that central banks are about to cut rates

US markets yesterday bounced back, recording their second-best day in history.

The gains happened amid speculation that world central banks were plotting interest rate cuts. Much of the gains were made in the last 90 minutes of trading, with the Dow Jones index jumping 889.35 points to 9,065.12.

The surge in the US came after days of upbeat trading throughout Europe and Asia, despite gloomy economic readings that depicted US consumer confidence falling to an all-time low and urban house prices continuing to fall at their fastest rate on record.

The uplift is believed to be linked to a widely held hope that both the US Federal Reserve and the Bank of Japan will today cut interest rates.

The European Central Bank is also under pressure to reduce rates, while the Bank of England is expected to cut borrowing costs in the UK by at least half a percentage point at the beginning of next month.