Japanese shares rebounded on Tuesday after a sharp plunge on Monday that sent shockwaves through global financial markets. The Nikkei 225 stock index surged by 10.23%, or 3,217 points, marking its biggest one-day gain in points and nearly reversing the previous day’s record drop.

In Europe, the FTSE 100 and stock markets in Paris and Frankfurt steadied. The sharp fall in Tokyo followed the Bank of Japan’s decision to raise interest rates for only the second time in 17 years. This decision sent the yen soaring against the dollar, making Japanese stocks and exports more expensive for foreign investors and buyers.

The Nikkei’s 12% drop at the start of the week weighed on global stock markets. Simultaneously, fears of a potential slowdown in the American economy also negatively impacted shares in the UK, Europe, and the US.

On Tuesday, the FTSE 100 opened higher with a modest gain of 0.33% before dropping. Stock markets in France and Germany also edged ahead in early trading but later fell back.