While you were sleeping: UPDATED Stocks, pound rebound after Brexit pounding

Equities on both sides of the Atlantic rose as investors picked up some bargains following a two-day Brexit-inspired rout amid expectations that central banks will follow through on their promise to help if needed.

Europe's Stoxx 600 Index finished the day with an advance of 2.6% from the previous close. Germany's DAX index rose 1.9%, the UK's FTSE 100 index rallied 2.6%, while France's CAC 40 index also added 2.6%.

"Stocks are rebounding on the expectation that there will be a coordinated intervention by central banks," John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva, told Bloomberg.

"What central banks can do is put confidence back in the market by telling everyone that they are here and ready to act. If we don't get that sort of support, we'll see further declines."

Wall Street recovers
Stocks on Wall Street recovered all of the previous session's losses but not Friday's big 600-plus point drop. The Dow Jones Industrial Average gained 269.48 points, or 1.6%, to 17,409.72. The Nasdaq Composite Index rallied 2.1% to 4691.87 and the Standard & Poor's 500 Index climbed 1.8% to 2036.09.

"This is a volatile and churning environment," Eric Wiegand, senior portfolio manager at US Bank in New York, told Reuters. "It's not going to be the blank summer months that we had grown accustomed to."

Gains in shares of Travelers Cos and those of JP Morgan Chase, up 2.9% and 2.2%, propelled the Dow higher. Shares of DuPont dropped, posting the largest percentage decline in the Dow of 3.4%.

Meanwhile, the latest US economic data showed gross domestic product grew at a 1.1% annual pace in the first quarter, exceeding the previously reported 0.8% increase.

Even so, concern about Brexit and its impact on financial markets and the global economy might weigh on consumers, some analysts said.

"The test comes in the next few months as the turbulence in financial markets may affect consumers' behaviour and also weigh on business investment," Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters.

"If financial markets settle down, the effect of the British referendum on the US economy will be small."

UK pound rises
The British pound rose, rebounding from the lowest level in more than three decades, gaining for the first time since last week's referendum but the outlook remains murky at best.

"I wouldn't put too much weight on this move-we're in uncharted territory now," Rob Carnell, chief international economist at ING Bank, told the Wall Street Journal.

Mr Carnell sees the pound falling to $US1.25 due to the continued post-Brexit uncertainty. "I wouldn't be going out and filling my boots with sterling," he says.

In an auction aimed to boost liquidity, the Bank of England allotted £3.072 billion to the nation's lenders, after having received bids totalling £6.3 billion.

"It's becoming more competitive for liquidity and we can see that there are some modest signs of stress outside of the equity prices, where there are much clearer signs of stress," Philip Rush, an economist at Nomura International, told Bloomberg.

"This is a higher call for liquidity than the banking system has asked for in a long time but £3 billion in the grand scheme of things is relatively low. It could have been a lot worse."

(BusinessDesk)