[NEW YORK] Wall Street stocks surged on Tuesday, leading most global equity markets higher as the US Federal Reserve chief signaled greater openness to cutting interest rates.

Fed Chair Jerome Powell, appearing in Chicago, acknowledged that trade conflicts had dimmed the growth outlook - remarks widely seen as opening the door to a potential interest rate cut.

"We are closely monitoring the implications of these developments for the US economic outlook and, as always, we will act as appropriate to sustain the expansion," Mr Powell said.

That marked a shift from recent Powell statements. The Fed has kept interest rates unchanged in 2019 after a series of interest rate hikes in 2018 and prior years.

Mr Powell's remarks assured the market "that the Fed is still on its side," said Briefing.com.

US stocks, already positive on somewhat more optimistic trade news, added to gains after Powell's comments. The Dow closed with a gain of 2.1 per cent.

Winners included large US banks, which were propelled by higher Treasury bond yields, and large technology companies such as Facebook and Google parent Alphabet that had fallen hard on Monday on reports of stepped-up US antitrust enforcement.

"This is the Fed's acknowledgement of where the market has gotten and what could happen if we get into an elongated trade war with China," said Art Hogan, chief market strategist at National Securities.

WORLD BANK CUTS FORECAST

Earlier, European markets also pushed higher, with the DAX in Germany jumping 1.5 per cent.

Shares of German automakers such as Daimler and Volkswagen gained following a jump in new car registrations in May, suggesting the powerhouse sector for Europe's top economy was recovering from a months-long bout of the blues.

Analysts said the gains also reflected somewhat more favourable trade news, with a Chinese official supporting continued trade negotiations and congressional Republicans signaling significant opposition to the White House's plan to place tariffs on Mexican goods.

But the blow from myriad trade conflicts contributed to a downbeat report from the World Bank, which slashed its global growth forecasts for the year in a report released after the market closed.

The world economy is now expected to expand by 2.6 per cent this year, three tenths of a percentage point lower than the January forecast, and well below the three percent growth seen in 2018, according to the Global Economic Prospects report.

"The bottom line is that the global economy is coming to a crossroads," World Bank economist Ayhan Kose, who oversaw the report, told AFP.

"We need to find ways to stabilise growth and I think further escalation of these trade tensions is now the number one risk that could actually weigh on the outlook," he told AFP.

AFP