Stock markets in Europe and Asia rose strongly after a summit of European leaders agreed hundreds of billions of dollars of measures to guarantee inter-bank lending and make state funds available to buy banking stocks.
But new stormclouds emerged with the European Union saying that Hungary may need help after its currency slumped last week.
Britain ploughed 37 billion pounds (S$93 billion) into a trio of struggling banks. France, Germany and Italy were to annouce national rescue packages later in the day.
The British government said it was 'taking decisive action' with its huge investment in Royal Bank of Scotland, HBOS and Lloyds TSB as part of a scheme announced last week which set aside 50 billion pounds to buy shares in troubled institutions.
A fourth bank, Barclays, said it would not need to take part in the government scheme but would still raise 6.5 billion pounds from private investors.
Leaders from the 15 nations of that use the euro single currency bloc agreed measures, similar to the British plan, at an emergency summit in Paris on Sunday.
In addition to setting up funds to buy into banks, the model foresees money being set aside to guarantee inter-bank lending and free up credit markets that have been spooked by the US sub-prime mortgage crisis.
European stock markets, which last week plunged by more than a fifth in their worst period since the 1929 crash, reacted positively to the plan Monday.
London, Frankfurt, Paris, Amsterdam and Milan all climbed by more than five per cent in early trading. In Asia, Hong Kong closed more than 10 per cent up, Australia rose 5.6 per cent and South Korea's KOSPI bounced 3.8 per cent higher.
Tokyo was closed for a national holiday.
European central banks moved to free up frozen lending by providing commercial banks with unlimited amounts of dollars in a joint operation that might be reinforced by Japan.
The Bank of England, European Central Bank and Swiss National Bank will loan dollars to commercial banks for periods of seven, 28 and 84 days, an ECB statement said.
'The Bank of Japan will be considering the introduction of similar measures,' it added.
Banks worldwide need dollars to finance operations, but the market on which they would normally borrow them has seized up following the collapse in the US subprime mortgage market.
The European Union said it was ready to help Hungary's government after its currency, the forint, slumped last week.
The EU said in a statement it 'welcomes the readiness of the IMF to consider providing technical and financial assistance as needed to Hungary.' It added that the EU would also use 'all available instruments with a view to supporting Hungary'.
Hungary's currency fell 10 per cent in 24 hours last week and analysts said it was struggling because investors had panicked and moved their capital out of the country.
Attention will now turn to the rescue packages being prepared in Berlin and Paris and the New York stock market opening to see whether markets can achieve a sustained rally.
German Chancellor Angela Merkel was to announce her government's plans at 1 pm (6pm Singapore time) and French President Nicolas Sarkozy was to make a national televised address at 3pm (8pm Singapore time).
On Sunday, Dr Merkel, Mr Sarkozy and 13 other European leaders signed a 14-point action plan under which the members of the eurozone bloc pledged to follow Britain's example and to ensure that no bank fails.
Experts said the cost would run into the hundreds of billions of euros.
Details of the plans will be announced ahead of a summit of all 27 European Union members in Brussels on Wednesday and Thursday, where more non-euro states are expected to sign on.
Meanwhile, Japanese Finance Minister Shoichi Nakagawa said he would consider guaranteeing all bank deposits 'if necessary", Jiji Press reported.
Currently, Japan's government Deposit Insurance Corporation guarantees up to 10 million yen (S$146,000) for each deposit.
In a sign that a measure of renewed confidence, oil ices ticked slightly higher. New York's main contract, light sweet crude for delivery in November was US$3.04 higher at US$80.74 dollars a barrel, recovering from one-year lows reached on Friday. -- AFP