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NEW YORK (Reuters) - Stock markets worldwide rallied on Tuesday on hopes of more stimulus measures in China and on strong German trade data, while Brent crude oil prices also rose.
China's imports shrank far more than expected in August, falling for the 10th straight month, though exports fell less than expected. Analysts said the imports data could lead to further policy easing from the Chinese government in coming months.
Those hopes helped U.S. shares advance, while data showing Germany's imports and exports hit record highs in value terms in July underpinned gains in European stocks. Germany's benchmark DAX share index .GDAXI ended up 1.6 percent.
A late bounce in Chinese stocks, which pushed the Shanghai Composite Index .SSEC up 2.9 percent after earlier declines, also supported European shares.
"We had some nice buying opportunities with the selloff in August, and I think people are starting to take advantage of that and put money to work," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.
"In China it seems like there is a willingness to continue with stimulus, so hopefully those markets will stabilize."
Brent crude prices rose as strength in stock markets helped the global oil benchmark recoup the bulk of its losses from the previous session.
Brent crude settled up $1.89, or 3.97 percent, at $49.52 a barrel. U.S. crude, meanwhile, settled down 11 cents, or 0.24 percent, at $45.94 per barrel.
MSCI's all-country world equity index, which tracks shares in 45 nations, was last up 7.03 points or 1.83 percent, to 391.68.
The Dow Jones industrial average .DJI ended up 390.3 points, or 2.42 percent, at 16,492.68. The S&P 500 .SPX closed up 48.19 points, or 2.51 percent, at 1,969.41. The Nasdaq Composite .IXIC closed up 128.01 points, or 2.73 percent, at 4,811.93.
Europe's broad FTSEurofirst 300 index .FTEU3 closed up 1.16 percent at 1,415.58.
U.S. Treasury yields rose as investors prepared for the possibility of the Federal Reserve increasing interest rates next week for the first time in almost a decade, and as the Treasury sells $58 billion in new supply this week. Benchmark 10-year notes were last down 18/32 in price to yield 2.19 percent, from a yield of 2.13 percent late Friday.
"People are getting a little bit geared up for the Fed next week," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
The renewed risk appetite helped the dollar gain against the safe-haven yen, but the greenback still inched lower against the euro. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.40 percent .DXY.
U.S. gold futures for December delivery settled down 40 cents at $1,121 an ounce, as uncertainty over the U.S interest rate hike persisted.
Expectations of higher rates, which would lift the opportunity cost of holding non-yielding bullion while boosting the dollar, have pushed the metal 5 percent lower this year and remain gold's biggest driver, analysts said.
Reporting by Sam Forgione; additional reporting by Nigel Stephenson in London and Caroline Valetkevitch and Karen Brettell in New York; Editing by Chizu Nomiyama