In Focus: Financial shares up as world markets rally

Financial shares rose on Wednesday following "sharp losses" earlier in the week as markets around the world rallied from a battering, according to reports.

Marketwatch states that Europe led the way in the mini-recovery, with stock markets in the UK, Germany and France all overcoming worries about slowing economies hitting company profits to record gains.

British financial institution the Royal Bank of Scotland saw its shares rise four per cent, while French bank Credit Agricole was up 3.6 per cent, it added.

The site also noted that US markets closed "decisively higher" after the Federal Reserve offered support to the country's financial sector.

Aluminium producer Alcoa also contributed to easing fears over earnings after its second-quarter profits outperformed Wall Street predictions thanks to increased prices and higher than expected demand.

Meanwhile, in Shanghai, stocks "soared" on Wednesday, as investors poured into the market looking to capitalise on recent losses to snap up some bargains, the site said.

The upward trend was also fuelled by widespread speculation that the Chinese government may be about to intervene in order to support and stimulate further market growth.