"Automatically electronic trading kicks in and they don't know the difference between a fictitious story and the truth and immediately started to buy and took us right back to the day's highs." More than 180,000 front month 10-year Treasury futures contacts traded in the period between 1:09 and 1:12 p.m. ET (1709 to 1712 GMT). US stocks sharply cut gains briefly and then bounced back. The dollar pared gains against the yen, and the euro extended declines against the dollar. In the energy market, crude oil prices fell as much as 70 cents a barrel in a three-minute period following the tweet, but just as quickly reversed those losses as it became clear the AP message was false. US gold futures spiked by more than $US5 an ounce, or 0.4 per cent, immediately after the tweet, but by five minutes later were trading lower.

Shortly after it became clear that the AP tweet was bogus, global equity markets resumed their upward trend, with Wall Street higher on strong corporate earnings. The Dow Jones industrial average was up 127.41 points, or 0.87 per cent, at 14,694.58. The Standard & Poor's 500 Index was up 13.95 points, or 0.89 per cent, at 1,576.45. The Nasdaq Composite Index was up 30.05 points, or 0.93 per cent, at 3,263.61. European shares posted their biggest one-day gain in seven months, while the euro hit a two-week low against the dollar after weak German data sparked speculation the European Central Bank could cut interest rates. The euro fell as low as $US1.2971 and market watchers say it may break decisively out of the $US1.30-to-$US1.32 range that has held for the past few weeks. It was last trading 0.5 per cent lower on the day at $US1.3000. MSCI's world equity index, which is heavily weighted toward US shares, was up 1 per cent.

The benchmark 10-year US Treasury note was unchanged with the yield at 1.6945 per cent. Twitter flash crash Reuters data shows that the benchmark S&P 500 index fell 14.6 points, or 0.93 per cent, in the space of three minutes when news of the tweet hit the market. With the S&P valued at roughly $US14.6 trillion at the moment of the false tweet, that three-minute plunge briefly wiped out $US136.5 billion of the index's value. "We see this every time this type of news comes out: liquidity evaporates quickly. High-frequency traders cancel their orders on even one little tweet," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. "They provide so much liquidity and don't have obligations like market makers did in the past."

Investors are also on edge following two fatal explosions last week at the Boston Marathon that led to a lockdown in Boston on Friday as police hunted for one of the suspects. Among the day's biggest gainers on Wall Street, Netflix Inc shares jumped 25 per cent to $US217.68 a day after reporting earnings that beat expectations and strong subscriber growth. Brent crude oil hovered around $US100 a barrel in choppy trading on Tuesday after weaker-than-expected manufacturing data from China and Germany darkened the outlook for fuel demand. The flash HSBC Purchasing Managers' Index for April fell to 50.5 in April from 51.6 in March as new export orders shrank in China. The PMI's 50-point level divides growth from contraction. The data followed lower-than-expected GDP growth for China in the first quarter which helped spark a sharp sell-off last week.

Loading June Brent crude fell by more than $US1.50 but recovered to trade up 5 cents at $US100.44 a barrel by 2:06 p.m. (1806 GMT). US crude for June delivery was down 3 cents at $US89.16. Reuters