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Wall Street shares opened sharply higher on August 26, with the Dow Jones 1.3% up, after losing ground on August 25.

At the same time, European stock markets lost ground as fears persist of a China-led economic downturn.

London’s FTSE 100 closed down by 1.7% , with markets in Paris and Frankfurt finishing down by 1.4% and 1.3% respectively.

Experts expect more market volatility until the Federal Reserve meets in September to set US interest rates.Wall Street during China crisis

The Shanghai index fell 1.27% to 2,927.29 on August 26, after veering in and out of negative territory.

Elsewhere in Asia, the region’s largest index, Japan’s Nikkei 225 finished 3.2% higher on Wednesday at 18,376.83 points.

The Nikkei’s gains come after a painful week for the Tokyo index, which had shed more than 8% in the past two sessions.

South Korea’s Kospi index was also in positive territory, closing 2.6% higher at 1,894.29 points, while in Australia, the S&P/ASX 200 finished 0.7% up at 5,172.80.

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Oil prices rose for the eighth session in a row, with Brent crude trading near a four-month high, boosted by the Federal Reserve’s move last week to stimulate the US economy.

The central bank said on Thursday that it would inject $40 billion a month into the economy.

Brent crude for November delivery was up 26 cents at $116.92 a barrel, while US crude was up 1 cent to $99.01.

There are fears that high oil prices could hamper economic recovery.

The Fed’s announcement that it would start a third round of bond-buying, known as quantitative easing, has been dubbed QE3.

Oil prices rose for the eighth session in a row, with Brent crude trading near a four-month high

Oil prices rose for the eighth session in a row, with Brent crude trading near a four-month high

“The big question is how long this Fed-inspired rally will continue, as QE3 was the last bazooka to be used in the central bank’s arsenal,” IG markets said in a report.

“For the time being, [the oil price] has given a powerful shot in the arm for global markets.”

But Victor Shum, managing director of consultancy IHS Purvin & Gertz, said the current price “doesn’t do any favors” for a global economy that is struggling to get back on track.

“A price rally like we are seeing now is only going to do more damage,” he said.

But he added that he did not expect this level of trading to last.

“Fundamentals at the moment are not indicative of these prices, and I don’t see oil being able to sustain this rally.”