LONDON (AFP) - European and Asian stock markets mostly rallied on Wednesday after Wall Street bounced higher overnight despite more gloomy economic data highlighting the worst recession in decades. In late morning European trade, London's FTSE 100 index of leading shares was up 0.17 percent to 3,720.37 points after strong gains on Tuesday. Frankfurt's DAX 30 jumped 1.51 percent and in Paris the CAC 40 gained 1.17 percent. "However tired we all are of the crisis and the enormous uncertainty, however much we want happy times back, we remain sceptical of the current episode of risk appetite," VTB Capital analyst Ivan Ivanchenko said of Tuesday's sharp rebound. "US retail sales (data on Thursday) may well serve as a reminder of the harsh reality." After a tough start to the week that saw new 26-year lows, Japan's Nikkei-225 index bounced back to finish the day up 4.55 percent. Hong Kong rallied 2.0 percent, Seoul jumped 3.23 percent, Sydney gained 1.88pc and Taipei was up 1.9pc by the close. "Rallies in equity markets overnight are being extended in Asia and are a valid reason for investor cheer when good news has been hard to come by of late," said Societe Generale strategist Patrick Bennett. "We don't believe the last couple of sessions will have marked a turning point. The global economy is far from out of the woods," he added Japan core machinery orders fell in January for a fourth straight month, the longest consecutive downturn on record, while China said exports were down more than 25 percent year-on-year in February - a worse-than-expected decline. Overnight on Wall Street, the Dow Jones Industrial Average picked up 5.8 percent and the Nasdaq soared 7.1 percent. Analysts said some of the positive sentiment came on news that Citigroup, which has had repeated bailouts from the US government, had been profitable in the first two months of the year. The news helped European gain around five percent on Tuesday. "What we want to see today (in Europe and the United States) is investors catching their breath and strategising their next trade," said City Index market strategist Joshua Raymond. "What we don't want to see is investors using (Tuesday's) rally to exit their positions on mass," Raymond said. More bad news Wednesday included Hong Kong's Cathay Pacific and US giant Delta Air Lines posting heavy losses while German carrier Lufthansa said its profits nosedived by nearly two-thirds last year and expected things to get even worse in 2009. In the car sector, troubled Japanese car group Toyota announced Wednesday 10pc cuts in production and pay at its two British factories in a bid to safeguard thousands of jobs. "We believe the measures we have announced give us a greater opportunity to maintain employment through this difficult period," Toyota said in a statement. The global auto sector is suffering greatly because of the economic slowdown, with thousands of jobs cut amid billion-dollar bailouts aimed at rescuing carmakers, notably in the United States.