While there is a meeting of the Group of 20 economies in France later this week, Europe is seeking to expand the European Financial Stability Facility (EFSF), possibly through a special purpose investment vehicle or the International Monetary Fund.
However, as China's President Hu Jintao left for an official visit to the region, including the G20 summit, China's state media has signalled it will not be a "saviour" to Europe; as China holds the world's largest foreign exchange reserves at $US3.2 trillion.
While the ride on the bourses in October was wildly volatile, it appears set to close as the best performing month Wall Street trading has seen in decades.
Earlier in October, the Standard and Poor's 500 Index came within 1% of falling into a bear market - shedding 19% since April, before recovering by 17%, Bloomberg News said.
Forsyth Barr broker Suzanne Kinnaird said stocks and many indexes in the US, Europe, United Kingdom, Asia and Australia made gains last week on the back of US gross domestic product rising at an annual rate of more than 2.5%, boosting of the European rescue fund to 1 trillion and also agreement on the 50% Greek debt write-off.
"Stocks were boosted after the US economy grew in the third quarter at the fastest pace in a year," she said yesterday.
In the US the Standard and Poor's 500 Index rose more than 3.8% last week, driving the index towards the biggest monthly gain since 1974, while the Dow Jones Industrial Average rose more than 3.6%.
The Stoxx Europe 600 Index gained more than 4.2% for the week, the UK's FTSE 100 Index was up more than 3.9% during the week and Japan's Nikkei 225 Stock Average rose more than 4.3%.
Craigs Investment Partners broker Chris Timms said while the European fund agreement and positive company reports had driven investor sentiment, he cautioned the recent few days' trading would be a "short-term relief" amd more market volatility was expected.
"The markets will remainfickle. There is more to come out of the euro zone with plenty of structural issues yet to be resolved," he said.
The Group of 20 major economies meet in the French city of Cannes on Thursday and Friday, just a week after European Union leaders reached the last-ditch deal to tackle its debt crisis.
China said it wanted more clarity before investing in the bail-out fund after head of the EFSF Klaus Regling held talks in Beijing to try to win help.
During his visit, Mr Hu will first visit Austria to sign several "framework" agreements, including in the areas of economics and trade, before heading to the G20 meeting, Xinhua said in a separate report.
China's Vice-Foreign Minister Cui Tiankai said on Friday the G20 should focus on the sovereign debt crisis in "developed countries" and the growing pressure of global inflation.
Another Chinese official has played down hopes of a breakthrough at the G20 meeting.
Vice-Finance Minister Zhu Guangyao, also speaking on Friday, said investment in the European bail-out fund was not on the agenda.
The Chinese Government fears the financial risk of a major investment, which could also spark a domestic backlash as the Chinese public asks why they should bail out wealthier nations.
Already, opposition to such a move is being expressed on the internet, on China's hugely popular weibos - microblogging sites similar to Twitter - and in state media.
"China will only participate in a global programme that is defensible to the Chinese people. So don't expect a 'bail-out' or 'rescue' from China," China macro strategist for brokerage CLSA, Andy Rothman said.
- Additional reporting: Business Desk/ Reuters/AFP
