U.S. stock markets rebounded near Tuesday’s close led by Internet companies and selected financials, but European and Asian markets remained bogged down by the global credit crisis.   

The late-session rally came despite the decision by the U.S. Federal Reserve Board to hold interest rates steady by leaving the federal funds rate at 2 percent.

One day after losing 500 points, the Dow Jones Industrial Average added 141 point, or 1.3 percent, to 11,058. The tech-heavy Nasdaq gained 25.6 points, or 1.2 percent, to 2,205.

In Europe, however, the FTSE 100 slumped 2.3 percent to 5,083, the German DAX shed 1.1 percent to 5,996, and the French CAC 40 fell 2 percent to 4,087.

Google tacked on 2.1 percent to $442.75, eBay added 4.8 percent to $23.05, and Yahoo gained 2.1 percent to $19.22.
 
Eyes around the world, however, remained riveted on American International Group, the world’s largest insurance company.

AIG, which faced insolvency without an injection of billions of dollars, was down $.50, or 10.5 percent, to $4.26 after regaining ground late Tuesday amid rumors that Washington planned to provide an aid package.

Should AIG unravel, the impact on global financial markets remained unclear.

The weekend bankruptcy of Lehman Brothers and Bank of America’s acquisition of Merrill Lynch had slammed financial stocks, but by Tuesday afternoon some traditional banks showed life.

Thrift Washington Mutual tacked on $.25, or 12.5 percent, to $2.25 and Bank of America added $2.11, or 8 percent, to $28.66. Investment banks, however, continued to face challenges. Morgan Stanley lost $3.58, or 11.1 percent, to $28.61.

Japan’s Nikkei Average closed down 5 percent to 11,609 as several Japanese banks acknowledged that they had exposure to Lehman Brothers. Meanwhile, Hong Kong’s Hang Seng index lost 5.4 percent to 18,300 and the Seoul Composite took an even bigger hit, losing 6.1 percent to 1,388.

After bailing out Fannie Mae and Freddie Mac earlier this month and arranging a takeover of investment bank Bear Stearns in March by JP Morgan Chase, Washington declined to intercede as Lehman Brothers collapsed over the weekend.

To contain the damage, central bankers from Tokyo to Washington injected funds into banking systems in a bid to ensure that markets remained liquid.

On Monday, New York State insurance regulators allowed AIG to use $20 billion of its subsidiaries’ assets as a short-term lifeline.