LONDON: Global stock markets rallied Tuesday on fading fears over dangers arising from the new Omicron Covid variant.

London stocks won 1.1 percent in afternoon trading, while Frankfurt and Paris both rose more than two percent.

The dollar trod higher, while oil extended gains on dimming energy demand concerns.

Wall Street's main indices climbed at the opening bell, with the Dow rising 1.0 percent.

Asian equities rose despite renewed worries over potential debt defaults in China's troubled property sector.

'Less damaging than feared'

"Markets flushed out at the first sign of Omicron, but now are more confident it won't be as bad as first feared," said Markets.com analyst Neil Wilson.

"Risk appetite is improving as evidence incrementally supports the case that the Omicron variant will be less damaging to the economy than was supposed at the end of November."

World stocks and oil had tanked on November 26 when news of the new variant first flashed across traders' screens.

After a rollercoaster ride since then, investors are now optimistic over the outlook in the run-up to Christmas.

"It's not that everything is perfect again," said market analyst Patrick O'Hare at Briefing.com.

"It's just that things are less bad, which is a perfect perception for a market that has seen some significant weakness beneath the index surface and believes things got overdone on those downside moves."

Omicron has been detected across the globe but no deaths have yet been reported.

Authorities worldwide are racing to determine how contagious it is and how effective existing vaccines are.

Top US pandemic adviser Anthony Fauci said over the weekend that, while more information was needed, preliminary data on the variant's severity was "a bit encouraging".

But "it looks like investors have made up their minds about Omicron," said analyst Fawad Razaqzada at ThinkMarkets.

"They think it is probably no more dangerous than the Delta variant of coronavirus and that preventative lockdowns and restrictions that we have seen will soon ease" and "another major economic shock will thus be avoided."

China property fears

Sentiment was also buoyed Tuesday by moves from China's central bank to limit the economic fallout from debt crises in its troubled property sector.

Hong Kong stocks jumped 2.7 percent and Tokyo won 1.9 percent, but Shanghai was only marginally higher.

Reports meanwhile surfaced Tuesday that Evergrande was planning what could become China's biggest debt restructuring, wrapping in all its offshore obligations as it faced default on a key payment.

Its struggles have fanned concerns about China's property sector, which forms a substantial part of the world's second-biggest economy.

Another major property player, Sunshine 100 China Holdings, also said it had missed a repayment deadline.

In response to the crisis, China's central bank said Monday it would cut the reserve requirement ratio by 0.5 percentage points for most banks, effective December 15.

The move reduces the amount of cash the banks must hold in reserve, which will allow 1.2 trillion yuan ($188.4 billion) to be injected into the economy over the long term, the central bank said in a statement.