Stocks and oil, at the forefront of a global market rout since the turn of the year, rebounded strongly on Friday thanks to hints of more monetary policy support by the European Central Bank and bargain-hunting from bruised investors.
World stocks recorded their biggest rise in a month and Asian stocks their best day in three months. Oil rallied around 5 percent for the second day in a row, recovering from 12-year lows to above $30 a barrel.
The surge comes a day after ECB President Mario Draghi signalled the central bank would ease policy further at its next meeting, in March to combat fading growth and disinflation, a message he reiterated at the World Economic Forum in Davos on Friday.
European stocks followed Asia's lead. The region's main indices rose around 2 percent for the second consecutive day. Remarkably, given the recent steep declines, some were on track for their best weekly performance in two months.
Investors seized on Draghi's comments and bet that the Bank of Japan might also ease policy further next week and that the Federal Reserve will go slow in raising U.S. rates this year.
"With inflation so low, it would be strange if central banks didn't do more in the face of such market turmoil and elevated risk factors," said John Reid, strategist at Deutsche Bank in London.
"It won't be a major growth stimulant, but any extra liquidity provided will have to go somewhere, so it's too early to say the central bank era of elevating asset prices is over," he said.
In early trade on Friday the FTSEuroFirst 300 index of leading European shares was up 2.2 percent, putting it on track for a weekly gain of around 2 percent.
Germany's DAX was up 2 percent and headed for a weekly rise of 2.2 percent. Britain's FTSE 100 was up 1.8 percent on the day and France's CAC 40 was up 2.5 percent.
Earlier this week, all of them had entered "bear market" territory, meaning they were down 20 percent or more from last year's peaks.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.4 percent on Friday, the most since Oct. 7 last year, after touching a four-year low on Thursday.
That puts the index on track for a 0.2 percent gain for a week in which oil prices plunged and concern over China's economy pummelled risk assets globally.
Japan's Nikkei surged 5.9 percent at the close, the most in more than four months. Chinese stocks, which had fallen almost 20 percent since the turn of the year, rose 1.3 percent.
EURO UNDER PRESSURE
Oil prices extended an overnight rally that began after data showed stockpiles at some U.S. sites rose less than some had expected and as cold U.S. and European weather spurred demand.
That gave traders the incentive to cover record short positions in oil, essentially bets that the price of oil would continue falling.
In early London trade, Brent crude futures were up 5.3 percent at $30.80 a barrel, extending its rebound from a 12-year low of $27.10 hit on Wednesday.
U.S. crude futures followed a similar path, rising 4.5 percent to $30.80 as well from Wednesday's 12-year low of $26.19.
Other commodities also gained. Three-month copper on the London Metal Exchange rose 0.4 percent to $4,450 a tonne, poised for a 2.7 percent weekly rise, its best week in more than three months.
In currencies, the prospect of looser ECB policy kept the euro under pressure. The single currency was down 0.4 percent at $1.0832.
Currency analysts at Goldman Sachs lowered their euro forecasts late on Thursday, in a note that predicted the currency would fall below parity with the dollar and end the year at $0.95.
"In our view there will be more easing for longer than the market expects," the analysts wrote. "This is the underlying reason why we think the euro's downtrend will continue and be large.
"We are keeping our end-2017 forecast unchanged at $0.90 at present, though we see downside risks to that."
The dollar was up 0.3 percent against the yen at 118.03 yen, pulling away from a one-year trough of 115.97 struck earlier this week against the safe-haven Japanese currency.
U.S. Treasuries prices fell. Benchmark yields rose from 3 1/2-month lows as the rebound in stocks and oil scaled back appetite for low-risk government debt.
The 10-year yield rose 3 basis points to 2.05 percent, and the yield curve - the gap between two- and 10-year yields - steepened from a multi-year low to around 119 basis points.