Nov. 4 (Bloomberg) -- Global stocks rebounded 21 percent from their bear-market low as central banks from Washington to Tokyo cut interest rates and the International Monetary Fund pledged to help emerging nations weather the credit crisis.

The MSCI All-Country World Index of 48 developed and emerging nations advanced 4.3 percent to 247.85 at 11:20 a.m. New York time today, extending its rally from a five-year closing low of 204.10 on Oct. 27. Japan's Nikkei 225 Stock Average increased 27 percent from its nadir last month, while Sweden's OMX Stockholm 30 Index gained 24 percent. Brazil's Bovespa jumped 37 percent and Hong Kong's Hang Seng Index advanced 31 percent.

``It's natural to see some relief especially when you consider that on a global scale there have been a lot of measures to mitigate the risk of a financial collapse,'' said Matthias Siller, a money manager who oversees about $5 billion at Baring Asset Management in London. ``There's definitely a lot of reasons out there to stay very, very cautious.''

The MSCI World Index of 23 developed nations including the U.S., U.K. and Japan also climbed more than 20 percent from its 2008 low for the first time today.

The lowest price-to-earnings ratios since 1998 lured investors back to global equities after the Federal Reserve, Bank of Japan and People's Bank of China reduced their benchmark interest rates in the past week and governments pledged as much as $3 trillion of emergency funds to spur lending. Emerging markets led the rally, climbing 33 percent as a group, after the IMF almost doubled borrowing limits for emergency loans and waived demands for economic austerity measures.

The MSCI All-Country index is still down 39 percent this year as more than $680 billion of credit losses and asset writedowns at banks worldwide threaten to push the global economy into a recession.

``We are in an environment of extremes,'' said Siller. ``The question is, `Has the market priced in all the negative news we are going to see?'''

To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Sarah Thompson in London at sthompson17@bloomberg.net.

Last Updated: November 4, 2008 11:26 EST