US and European stocks rallied Monday, staging a strong bounceback from last week's rout, while bitcoin sank on news of a Chinese crackdown on its massive cryptocurrency mining industry.

The Dow last week suffered its worst week since October 2020, dropping 3.4 percent, due in part to unease at the Federal Reserve's shift towards a more hawkish stance on monetary policy.

Investors were rattled last week when the Fed moved up its forecasts for raising interest rates, while still arguing that consumer price increases were transient.

But stocks rebounded Monday, led by financial, industrial and energy shares that had slid last week.

"The market is correcting the overcorrection from last week," Maris Ogg of Tower Bridge Advisors said of Monday's session.

John Williams, head of the Federal Reserve Bank of New York, said at a gathering Monday that he still thinks higher prices are due "mostly" to factors connected with the reopening of the economy. These stresses should abate over time, but the Fed will continue to monitor incoming data, he said.

Fed Chair Jerome Powell is due to appear before a congressional panel Tuesday.

The Dow finished up 1.8 percent at 33,876.97.

Earlier, London rose 0.6 percent on the day after UK supermarket group Morrisons rejected a takeover approach.

Frankfurt climbed 1.0 percent and Paris rose by 0.5 percent.

"Fears over an increasingly hawkish Fed appear to have been eased today, with markets throughout Europe and the US on the rise," said market analyst Joshua Mahony at online trading platform IG.

Meanwhile, bitcoin slumped more than 10 percent at one point after China intensified a crackdown on trading and mining operations.

The world's most popular digital currency later stood down about nine percent at $32,642.

Chinese mines power nearly 80 percent of the global trade in cryptocurrencies despite a domestic trading ban since 2017, but in recent months several provinces have ordered mines to close as Beijing turns a sharp eye to the industry.

Authorities in the province of Sichuan ordered the closure of 26 mines last week, according to a notice widely circulated on Chinese social media and confirmed by a former bitcoin miner.

Oil Prices
Oil prices resumed their upward path as traders bet that the global recovery will fire demand for the commodity Photo: Getty Images North America / DAVID MCNEW