Overnight Market

US stock markets recovered on Tuesday from heavy losses after being rattled by concerns over Europe's deepening debt crisis, tensions on the Korean peninsula and the prospect of a US banking overhaul. Strategists linked the rebound in stocks to strengthening in the euro. The single currency earlier fell to an 8 1/2-year low against the yen and approached a 4-year low versus the dollar, while safe-haven US Treasuries rallied.

The euro's strength has been a proxy for risk appetite and confidence in the euro-zone economy. European markets fell to their lowest level in nearly 9 months while the Libor three-month dollar rate rose to the highest level since July. The Spanish government's rescue of a local bank over the weekend made banks wary of lending to European institutions

The blue-chip DJIA recouped early losses of over 250 points to finish just above the symbolic 10,000 point mark, but still in the red, down 23 points to 10,044. The tech-rich Nasdaq Composite lost 2.60 points to 2,211. But the broad-based S&P 500 staged a dramatic comeback, closing up 0.38 points at 1,074. Earlier, the S&P 500 fell through the May 6 "flash crash" level to its lowest level since early Nov 09, down 14.5% from its late April closing high.

The CBOE VIX Index also known as Wall Street's fear indicator fell to 34.61 after reaching an earlier high of 43.74.

At one point all 30 of the Dow's stocks were down with shares in consumer and financial firms hit hardest but reports that derivatives curbs outlined in draft US legislation may be eased helped financial firms to recover some ground. Goldman Sachs shares soared over 4% followed by Wells Fargo, JPMorgan and BoA all ending in positive territory. Shares of materials companies and retailers were among the top performers, with the S&P Materials Index up 1.6% and the S&P Retail Index finishing up 1.4%

There was some positive US economic news for investors to chew. US consumer confidence rose for the 3rd straight month in May to 63.3, its highest score in more than two years from 57.7 last month. But that was countered single-family home prices dropping in the 1Q on renewed price pressure as federal aid faded away and income expectations remain downbeat.

Volume was strong with about 13.1bn shares traded, well above last year's daily average of 9.7bn.Declining stocks outnumbered advancing ones by a ratio of almost 2 to 1 on both the NYSE and Nasdaq.

Major U.S. indexes had fallen more than 3% early in the session.
The Dow dropped 22.82 pts, or 0.23%, to 10,043.75.
S&P500 Index gained just 0.38 pts, or 0.04%, to end at 1,074.03.
Nasdaq shed 2.60 pts, or 0.12%, to 2,210.95.