Global stock markets soared on Monday, with Frankfurt up six percent and Hong Kong 10 per cent higher as governments pumped billions of extra dollars into banks crippled by the credit crunch.
Leading indices had plunged by almost a quarter in value last week on a collapse of confidence in the global financial system, while some shed as much as 10 percent just on Friday in the worst performance for 21 years.
"We have had our first significant bounce in the markets for sometime now," City Index market strategist Joshua Raymond said in London.
"It's a dangerous time to start believing we have hit a bottom in the markets. With the volatility here to stay and confidence likely to seesaw for sometime, we are only really going to be able to tell if we have hit a bottom a month after we have done so," he added.
Central banks in Europe fired a new broadside on Monday to free up frozen lending, by providing commercial banks with unlimited amounts of dollars in a joint operation that might be reinforced by their key Japanese ally.
Governments in Berlin, Paris and Rome were to announce more than half a trillion euros in rescue funds for Europe's stumbling banking sector, as each puts a price tag on a joint bail-out plan.
Leaders of the 15-country eurozone single currency bloc, following the lead of Europe's financial giant Britain, agreed Sunday on a high-stakes joint bid to pull the world financial system back from the brink of collapse.
Britain said it would invest up to 37 billion pounds (47 billion euros, 64 billion dollars) in ailing British banks Royal Bank of Scotland, HBOS and Lloyds TSB.
Germany was to unveil a 470-billion-euro rescue package to save the country's banks from collapse, government sources said.
"Friday's late rally on Wall Street, a positive start to trade in Asia and news of widespread government intervention on a worldwide basis to prop up ailing banks looks likely to give equity traders ... something to cheer as the new weeks gets underway," said CMC Markets dealer Matt Buckland.
"But there has to be a degree of caution in the whole equation too.
"After all, we've seen high level plans from various quarters that were set to thaw frozen credit markets but the overall reaction has repeatedly been rather muted and the cynics will be left thinking that today could ultimately end up being more of the same," Buckland added.
In midday trade, Frankfurt's stock market was up a huge 6.15 percent and Paris soared 6.36 percent. London won 4.84 percent, Madrid rallied 6.85 per cent and Zurich rocketed 7.63.
Iceland's Reykjavik stock exchange, which had been expected to reopen on Monday after closing for two days last week, will remain closed until Tuesday.
Hong Kong closed up 10.2 per cent on Monday while Tokyo, Asia's largest stock market, was shut for a public holiday after slumping 24 percent last week.
Australian shares ended 5.6 per cent higher -- rebounding from an 8.3 percent plummet Friday -- after Canberra announced plans at the weekend to guarantee bank deposits.
In a bid to shore up the market Australia's central bank also pumped 2.85 billion dollars (1.9 billion US) into the financial system to ease the grinding liquidity crisis.
"This is the first really solid move for the (Australian) market to get its teeth into and it's a wonderful bounce to give people a bit of confidence," said ABN Amro Morgan private client adviser Bill Bishop.
He warned, however, that the government's deposit guarantee was probably not enough to ensure a lasting change in market direction.
New Zealand had a rollercoaster after opening lower, then moving into positive territory but ending the day 0.82 percent off despite similar government guarantees on bank deposits to Australia.
Seoul bounced 3.8 per cent higher after the exchange was earlier forced to suspend trading temporarily to cool the market. Taiwan closed down 2.15 per cent.
The rosier stocks picture came after markets around the world saw some of their worst losses in years last week, as spooked investors fled shares in a worldwide collapse of confidence that triggered more panic selling.
The Saudi Arabia stock market, the largest in the Arab world, soared 5.5 per cent at the opening on Monday to above the 6,000-point mark after hitting a four-year low two days ago.