After China led a global market downturn yesterday, a rally on the Shanghai stockmarket has helped a rebound on Wall Street.

Shanghai closed nearly 4 per cent up, but analysts are predicting further big sell-offs in China.

Wall Street was also helped by comments by United States Federal Reserve chairman Ben Bernanke.

He said the bank remains confident of moderate growth in the US economy.

On the New York Stock Exchange, the Dow Jones Industrial Average closed up 52 points at 12,268.

The high-tech Nasdaq composite index was up eight points at 2,416.

But the British market has continued to slide, with banks bearing the brunt of the sell-off.

London's FT-100 index dropped 114 points to 6,171 - a slip of 1.8 per cent.

Yesterday, the Australian share market fell by almost 3 per cent, the biggest loss since the September 11 attacks in 2001.

The All Ordinaries index lost 161 points to 5,816.

The ASX 200 dropped 61 points to 5,832.

BHP Billiton and Rio Tinto led the losses, with both mining companies dropping about five percent.

Woolworths added 46 cents to $27.20 after announcing a strong half-yearly profit.

In overnight trade on the Sydney Futures Exchange the Share Price Index 200 contract was up 23 points at 5,825.

The 10-year bond contract was almost unchanged at 94.29, with the implied yield at 5.7 per cent.

On foreign exchange markets, the Australian dollar is fairly settled.

At 8:00am AEDT, it was being quoted at 78.80 US cents.

On the cross-rates, it was at 0.5954 euros, 93.30 Japanese yen, 40.1 pence Sterling and $NZ1.122.

The gold price bounced around overnight, and seemed to have settled around $US669.50 an ounce.

The spot price of West Texas crude oil had risen 30 cents to $US61.75 per barrel.