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World stocks struggle back after rout

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(CNN) -- Most Asian and European markets fell for the second consecutive day Wednesday, while stocks in China and the U.S. made a recovery following a massive selloff a day earlier that pummeled stocks and sent shock waves through the investment world.

Tuesday's rout -- which started in China and snowballed into Europe and Wall Street -- slowed slightly as investors bought up stocks at the lower prices and many analysts called for calm. (Watch what an analyst says caused the global selloff)

Stocks dipped in and out of negative territory in New York, but had made a modest recovery by 1.30 p.m. ET after Federal Reserve Chairman Ben Bernanke helped ease investor concerns following a brutal day on Wall Street. (Full story)

Bernanke said U.S. financial markets appeared to be "working well" and were functioning normally. (Full story)

In Europe, shares tumbled for a second day Wednesday as weaker-than-expected U.S. data sparked a fresh selloff in global equities. (Full story)

Earlier in Shanghai -- where the selloff began Tuesday with a 9-percent drop, the biggest in a decade -- stocks staged a comeback Wednesday, even as Asian markets still struggled to claw back some of their losses. (Full story)

China's main index rose more than 4 percent in late session trade after opening 1.34 percent lower. (Full story)

"The real question is whether New York will be able to rebound tonight. If it doesn't, investors are going to start looking for the reasons behind all this selling," Tatsutyuki Kawasaki, director of equities trading at Kaneyama Securities, told Reuters.

Zhou Lin, of Huatai Securities, added: "The medium- and long-term outlook for the market is not bad."

Tuesday's collapse was sparked by speculation of a crackdown by Chinese authorities to ease the huge flows of cash into the market, which has been growing at a pace that many analysts believe is unsustainable and could lead to an even bigger correction.

That was followed by weaker-than-expected U.S. manufacturing data, prompting investors to jump out of the stocks and into less-risky bonds. The result was the Dow Jones Industrial Average's worst point slide since the aftermath of the September 11, 2001 attacks. (Full story)

"I honestly think it's a tad of an overreaction to China and a tad of an overreaction to what happened to the U.S. durable goods orders," Hans Kunnen, at Colonial First State in Sydney, told Reuters.

"The global economic environment is still relatively firm, as we've seen in our own reporting season, corporate earnings are strong...and many people will see this as a buying opportunity."

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