Shares rose more than 1 per cent on Thursday, snapping their three straight sessions of losses, as investors bought beaten-down stocks while upbeat US markets overnight also improved sentiment.

Wall Street stocks jumped almost 2 per cent on Wednesday in the latest volatile session as investors weighed the impact of a stumbling Chinese economy and global market turmoil on the Federal Reserve's impending decision about when to raise interest rates.

"Two reasons why the market is up - one is it was oversold and (the other is) positive US cues," said Alex Mathews, head of research at Geojit BNP Paribas.

The benchmark BSE index ended higher by 1.22 per cent or 311.22 points at 25,764.78 while the broader NSE Nifty rose 1.3 per cent or 106 points to 7,823.

All the sectors finished in the green.

Realty, metal, power, capital goods, banks, and auto were the top gainers.

Cairn surged 5.78 per cent and was the top gainer on the Nifty. Tata Steel, HDFC, Axis Bank and UltraTech Cement clocked gains of over 4 per cent.

Axis Bank rose 4.1 per cent while HDFC Bank was up 1.5 per cent.

Tata Motors rose 2.2 per cent while Maruti Suzuki gained 2.8 per cent.

Ambuja Cements was up 3.7 per cent after Nomura upgraded the stock to "buy" from "neutral".

IT stocks also reversed their losses. TCS gained 0.5 per cent. Infosys was up 0.08 per cent and Wipro was up 2.4 per cent.

Volatility fell 9.5 per cent with the India Vix ending at 24.11.

FIIs net sold shares worth Rs 1,573 crore on Wednesday. They also sold index futures worth Rs 1,790 crore.

A report by SMC Investments and Advisors said "Asian stocks rose for the first time this week as a two-day holiday in China gave investors respite from the market that's been at the centre of recent global volatility. US stocks rallied on Wednesday as a Federal Reserve report painted a more optimistic economic picture, soothing worries about the possible impact of the slowdown in China on the US."

Brokers said buying at prevailing low levels amid a firming trend at some Asian markets provided support to the market. The volatility in the market is likely to continue till the US Federal Open Market Committee meeting on September 16-17, a dealer said.

Global markets

World stocks rose on Thursday, lifted by the strong rally on Wall Street the previous day, but investors were cautious ahead of a potentially critical 24 hours that will include a European Central Bank policy meeting and the latest US jobs data.

The ECB is expected to lower the central bank's growth and inflation forecasts on Thursday, while Friday's US employment data could be a major factor in determining whether the Federal Reserve raises interest rates later this month.

In early trading on Thursday the FTSEuroFirst leading index of 300 shares was up 1.5 per cent at 1,417 points. Germany's DAX was up 1.8 per cent at 10,231 points, France's CAC 40 was up 1.6 per cent and Britain's FTSE 100 was up 1.5 per cent.

Japanese stocks rose as bargain hunters picked up shares which have been battered for weeks by fears of a China-led global slowdown. Overnight gains on Wall Street and a market holiday in China also helped support sentiment, but volatility remained high, suggesting investors remain on edge. The Nikkei share average edged up 0.5 per cent to 18,182.39 points, snapping a three-day losing streak that knocked 5.4 per cent off of the benchmark index by the end of trading on Wednesday.

Financial markets in China and Hong Kong are closed today for a public holiday.

Wall Street stocks jumped almost 2 per cent on Wednesday in a volatile session as investors weighed the impact of a stumbling Chinese economy and global market turmoil on the Federal Reserve's impending decision about when to raise interest rates. The US Dow Jones Industrial Average ended 1.82 per cent higher in yesterday’s trade.

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