U.S. government debt prices slipped, paring Monday’s frantic charge for safe-haven investments. Oil rebounded more than US$2 a barrel toward US$98 after nearly a 10 percent drop the previous session as investors were less fearful of a major meltdown in capital markets.

The dollar jumped as much as 1 percent against the yen.

European stock markets closed higher on Tuesday, getting a boost from a rebound on Wall Street as investors hoped another vote on the U.S. financial bailout package will see the plan passed.

In London, the FTSE 100 index of leading shares finished with a gain of 1.74 percent at 4,902.45 points, the Paris CAC 40 rose 1.99 percent to 4.032.10 points and Frankfurt’s DA-- added 0.41 percent to 5,831.02 points. U.S. stocks rose more than 2 percent, adding to investor optimism after equity markets in Europe also posted solid gains. The bailout’s rejection in Congress buzzed nearly 9 percent off the broad S&P 500 on Monday.

Shortly after the open, the Dow Jones industrial average .DJI was up 189.80 points, or 1.83 percent, at 10,555.25. The Standard & Poor’s 500 Index was up 24.42 points, or 2.21 percent, at 1,130.81. The Nasdaq Composite Index was up 34.64 points, or 1.75 percent, at 2,018.37.

U.S government debt fell. The benchmark 10-year U.S. Treasury note US10YT=RR fell 19/32 to yield 3.65 percent, and the 2 year U.S. Treasury note US2YT=RR fell 7/32 to yield 1.73 percent.

The yield on one-month T-bills US1MT=RR, which investors see almost as good as cash, dipped closer to zero percent in early trading, a sign investors were still willing to earn close to nothing in return for not losing their shirts.

The dollar rose against a basket of major currencies, with the U.S. Dollar Index up 1.52 percent at 78.855.

The euro fell 1.7 percent at US$1.4158.