Shares in US banks have recovered some of the steep losses they have seen since the collapse of Silicon Valley Bank (SVB).

US stock markets opened higher on Tuesday, and some of the US regional banks saw big gains.

Regulators in the UK, the US and Asia have acted quickly to try to contain any fallout from SVB’s demise.

The Bank of Japan moved to keep financial markets stable after its leading stock index fell 2.1%.

Investors have been worried that other banks may be exposed to similar problems.

Until last week’s shock collapse, SVB was a relatively little-known bank – it was the 16th largest in the US.

However, a decision to invest in assets such as government bonds when interest rates were at record lows left SVB exposed to huge losses when central banks started raising rates.

There is concern that other banks could be caught out in the same way.

Russ Mould, investment director at AJ Bell, said: “I think SVB was a badly-run bank that took too much risk in one sector and was caught out by higher interest rates which if managed properly it would not have been.

“But higher interest rates will bring more challenges to banks, the economy and start-up firms for sure.”

In the US, shares in a number of regional banks had plunged on Monday on worries over wider problems. But as trading began on Tuesday, San Francisco-based First Republic Bank – which had seen its share price tank by 62% on Monday – jumped 50%, one of a number of firms whose shares were staging a recovery.

The three main indexes were also positive, with the Dow Jones Industrial Average trading almost 1% higher in early afternoon trade in New York, the S&P 500 up more than 1% and the Nasdaq roughly 2% higher.

The rally followed steep losses overnight in Japan, where major lenders such as the country’s largest bank MUFG, had seen their share price tumble by more than 8%.

An index of Japanese banking stocks, known as the Topix Banks Index, plunged by 7.4%, despite reassurances from the Bank of Japan (BoJ).

“Japanese financial institutions’ direct exposure to Silicon Valley Bank is small, and thus the impact is likely limited,” said a BoJ official.

The European Stoxx banking index also opened lower on Tuesday but then recovered to end nearly 3% higher.

Separately Credit Suisse’s share price continued to tumble after it admitted it found “material weaknesses” in its internal controls over financial reporting. It also announced that it would slash its bonus pot – although it said bankers will still get a share of 1bn Swiss francs (£900m).

Credit Suisse’s share price fell by 1.9%.

In the UK, bank shares – which saw sharp falls on Monday – were all mostly higher by Tuesday afternoon. The FTSE 100 closed up almost 1.2%.

But shares in HSBC, which rescued SVB’s UK business for £1, closed down 1%.

SVB was taken over by US regulators at the weekend after a surprise sale of some bonds last Wednesday sparked a run on the bank.

New York-based Signature Bank, which focuses on the cryptocurrency industry, also collapsed at the weekend.

There is now speculation that the Federal Reserve, the US central bank, will curb an interest rate rise next week to quell turmoil in the banking sector.

The Fed has been raising interest rates to calm the pace at which prices are rising – which is known as inflation.

On Tuesday, new figures revealed that the annual rate of US inflation eased to 6% in February, down from 6.4% in January.

The US Fed has been raising its key interest rate by as much as 0.75 percentage points, although in February its rate-setters voted for a smaller 0.25 percentage point increase.