Global stocks rose sharply this evening and the price of government debt fell on optimism over efforts by world leaders meeting in London to solve the economic crisis and a change in US accounting rules that will help troubled banks.
Stock markets in Europe, on Wall Street and an index for global stocks all rose more than 4 per cent after world leaders at the G20 summit agreed to pump an additional $1 trillion into the ailing global economy through extra funding for groups like the International Monetary Fund.
Financial shares, a sector that led stocks deep into bear territory but a key driver behind a recent equity rally, surged on bets for an improving global economy and the easing of US accounting rules that have battered their balance sheets.
The surge was mirrored on the Dublin market which rose 3.4 per cent to leave the Iseq index of Irish shares up 78 points on the day at 2,364.
Oil prices also rose more than 8 per cent to above $52 a barrel .
The positive tone coming from the G20 summit raised the risk appetite for many asset classes by raising hopes among investors that a coordinated effort was underway to tackle the worst economic downturn since the Great Depression.
US government bonds extended losses as investors piled into equities while euro zone government bonds slid after the European Central Bank cut interest rates a less-than-expected one-quarter percentage point to 1.25 per cent.
The euro soared to nearly $1.35 after the ECB confounded expectations for a deeper cut to 1.0 per cent. But the euro eased a bit after ECB President Jean-Claude Trichet refused to rule out additional rate cuts in the future.
The Dow Jones industrial average rose 306.80 points, or 3.95 per cent, at 8,068.40. The Standard & Poor's 500 Index gained 33.77 points, or 4.16 per cent, at 844.85. The Nasdaq Composite Index climbed 70.96 points, or 4.57 per cent, at 1,622.56.
The pan-European FTSEurofirst 300 index of top shares surged 4.9 per cent to 781.48 points, leaving the index still down about 6 per cent for the year.
Overnight in Asia, stocks shot to a three-month on hopes the U.S. downturn has bottomed.
Japan's Nikkei share average rose 4.4 per cent while the MSCI index of Asia Pacific stocks outside Japan firmed 5.8 per cent after the G20 news.