After a wildly volatile day for markets on Tuesday, Asian and European markets rebounded, but traders and analysts warned the fix could turn out to be only temporary and that fears of a US recession were far from over.

Speaking in Davos, Rahul Bajaj, chairman of Indian industrial group Bajaj Auto, said: "I don't know whether there will be a recession in the United  States, but I do know that one year ago, at this time, things were very rosy."

Stephen Roach, from US bank Morgan Stanley, said: "Europe is not going to get a special dispensation from the global slowdown."
 
The US Federal Reserve's aggressive 75 basis point cut in borrowing costs was the first time it had changed interest rates outside its regular rate-setting meetings since 2001, days after the September 11 attacks.

In the run-up to the three-day event, Klaus Schwab, WEF founder, had said he hoped that the meeting would avoid "excessive pessimism".

But recent events look like that will be a difficult stance to avoid.

Gloomy agenda
 
This year's invitation list includes 27 heads of state or government, 113 cabinet ministers and several hundred corporate leaders.

The agenda for the event reflects the prevailing mood, with debates scheduled on subjects such as "Planning for a global recession" and "If America sneezes, does the world still catch a cold?"

Given the market turmoil, other issues that form the core of this year's agenda may be overshadowed.
 
Nevertheless, the prospect for peace in the Middle East is likely to be a major theme, as will climate change, terrorism, nuclear proliferation and poverty and disease eradication.

Notable attendees this year include Pervez Musharraf, Pakistan's president; Afghanistan's Hamid Karzai; Shimon Peres; Israel's president; Colombia's Alvaro Uribe; and Gloria Arroyo from the Philippines

Again, unlike recent years, this week's gathering is low on showbiz personalities highlighting causes.

But Emma Thompson, the British actress; Paulo Coelho, the Brazilian author; Bono, the Irish rock singer and campaigner; will add a smattering of glamour to the proceedings.