Asian and European shares extend rally as investors worldwide await Federal

LONDON (CNNMoney.com) -- Stocks in Europe and Asia extended a global rally Wednesday as rate-cut hopes bolstered investors.

In the U.S., futures declined a day after the Dow Jones industrial average posted its second largest single-day point gain ever.

Futures give an indication of how markets may open when trading begins in New York.

European shares climbed in the early going. In morning trading, Britain's FTSE 100 was up 5%. The CAC-40 in France jumped 6.8%, while Germany's DAX fell 2.6%.

Stocks in Asia mostly advanced. Tokyo's Nikkei index soared 7.7% while Hong Kong's Hang Seng index gained 1.6%. In Seoul, however, the KOSPI slipped 3%, giving up earlier gains

Investors are betting that central banks worldwide will further slash interest rates to boost the sagging global economy.

The Federal Reserve is widely expected to cut rates to 1% at the conclusion of its two-day meeting Wednesday. The policy decision is due at 2:15 p.m. ET.

The Bank of Japan is due to announce a rate decision Friday. The European Central Bank and Bank of England are both scheduled to deliberate interest rates next week.

Rate-cut optimism helped the blue-chip Dow surge 889 points, or 10.9%, on Tuesday. It was the Dow's second-biggest one-day point gain, following a 936-point rally two weeks ago. The percentage gain was the sixth-biggest for the index.

The Standard & Poor's 500 index gained 10.8% and the Nasdaq composite added 9.5%.

Matt King, chief investment officer at Bell Investment, said the rally may signal the end of the protracted market downturn.

"I'm not 100% sure if we're going to take off from here - I think that might be a little bit too optimistic - but I do think we've seen the worst of this," King told CNN Radio.

Despite Tuesday's big rally, October is still shaping up to be one of the worst months on Wall Street ever.

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