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TOKYO — European markets bounced back and U.S. stock futures rocketed higher Tuesday as China cut interest rates for the fifth time since November in an effort to boost its slowing economy.

Dow, Nasdaq and S&P 500 stock index futures were all up over 3%. European stocks rose sharply.

France's CAC 40 index added 3.5% and Germany's DAX index was up 3.1%.

The People's Bank of China said the rate for a one-year loan will be cut 0.25 percentage point to 4.6% and the one-year rate for deposits will fall to 1.75%.

The central bank also lowered the amount of crash reserves Chinese banks are required to hold.

The announcement was made after the close of Chinese and other Asian markets, which were volatile Tuesday as Chinese stocks plunged again and Tokyo markets also fell sharply after earlier rebounding.

The Shanghai composite index declined 7.6% to 2,964.97.

The index is now below the psychologically important 3,000 level.

On Monday, China's benchmark plummeted 8.5%, triggering a wave of major stock markets losses worldwide, including the Dow, which fell 3.6%.

China's smaller Shenzhen composite index also saw sharp declines, falling over 7%.

In Tokyo, the benchmark Nikkei 225 index reversed early gains before falling nearly 4%. That followed a 4.6% plunge Monday to the lowest level seen since late February.

"Relief, bargain-hunting and the realization that Fed interest rates could be lower for longer are all likely contributors to this morning’s better tone," said Jane Foley, an analyst at Rabobank in London, in comments emailed before China cut rates.

Some analysts nevertheless cautioned that the drop in China share prices reflects a necessary market correction.

"Investors are overreacting about economic risks in China," Capital Economics said in a research note Tuesday. "A combination of poor data and policy inaction in China may have triggered today's market falls but the bigger picture is that we are witnessing the inevitable implosion of an equity market bubble."

The volatility followed Monday's continued downdraft on Wall Street as the Dow — which was briefly down more than 1,000 points — finished with its second drop of more than 500 points in as many days. The broader Standard & Poor's 500-stock index tumbled into official correction mode for the first time since 2011.

Elsewhere across Asia, Hong Kong's Hang Seng, which lost 4.6% Monday, rose 0.7% on Tuesday. Sydney's S&P ASX 200 advanced 2.7%. And Seoul's Kospi index added about 1% after shedding 3% the previous day.

China is facing a slowdown in economic growth, the banking system is short of cash, and investors are pulling money out of the country.

"More (government) measures are needed to activate the market, like reducing taxes and restoring confidence in the real economy," said Xiao Lei, a senior market analyst at Shiji Jinhang, in Beijing.

The steep loses for Chinese stocks came amid reports that Beijing may be censoring negative media coverage of China's financial markets.

George Chen, managing editor of Honk Kong's South China Morning Post, shared on Twitter an apparent image of a directive from the Chinese government ordering the removal of five critical articles from mainland China news portals. USA TODAY could not independently verify the authenticity of the order from Beijing.

However, for several hours Monday night and Tuesday morning, people in China searching for the term "stock crash" on Chinese search engines were told that "in accordance with the relevant laws, regulations and polices, some search results have not been displayed."

Contributing: Greg Toppo in McLean, Va., Hannah Gardner in Beijing and Kim Hjelmgaard in Berlin 

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