Britain's FTSE 100 index of leading shares was up 88.94 points, or 2.2 per cent, at 4,151.95, while Germany's DAX was 11.74 points, or 0.3 per cent, higher at 4,793.07. The CAC-40 in France was 49.81 points, or 1.5 per cent, stronger at 3,379.73.

The Dow Jones index of leading US shares opened 54 points, or 0.6 per cent, higher at 8,906.22.

Those gains follow the 3.6 per cent advance on Japan's Nikkei 225 to 9,005.59 and the 5.3 per cent jump in the Hang Seng index in Hong Kong to 15,323.01.

Stock markets have been buoyed by the fall in interbank lending rates in light of the flurry of government efforts to put money into banks over the last couple of weeks, and by coordinated interest rate reductions and massive liquidity boosts by central banks.

'That has certainly helped and we are definitely seeing almost normal markets and maybe we will see markets build on the lows of last week,' said David Jones, chief markets strategist at IG Index.

Figures earlier confirmed that money market rates are falling.

The interbank lending rate for three-month dollar loans fell for the sixth day running Monday and by its biggest daily amount since January. It dropped 0.36 per cent to 4.06 per cent, while the three-month Euro Interbank Offered Rate, or Euribor, fell almost 0.05 per centage points to 5.00 per cent.

Overnight, the Hong Kong interbank offered rate, known as Hibor, for three-month loans tumbled to 3.66 per cent from 4.19 as the territory's de facto central bank pumped more money into the financial system.

Abnormally high interbank lending rates have been a sign of distress in credit markets and been the catalyst for the crisis in the financial markets over recent weeks. High interbank rates can choke off credit to businesses and individuals, hurting the economy.

Some financial stocks in Britain benefited from the thawing of money markets with Britain's Barclays PLC and Lloyds TSB PLC up 4.1 per cent and 2.4 per cent respectively. Royal Bank of Scotland PLC was also up 4.5 per cent on reports that CVC Capital Partners and Swiss Re are looking to buy a majority of the British bank's insurance assets.

The biggest gainer in Europe was Amsterdam-listed ING Groep NV after the Dutch government injected 10 billion euro (S$19.6 billion) into the financial company over the weekend. Its shares were up 23 per cent, almost recouping most of last Friday's losses.

Energy stocks, such as BP PLC and Royal Dutch Shell, were also up as oil prices rose another US$1.78 (S$2.63) a barrel to over US$73.63 on mounting talk that Opec will cut production at the end of this week in an attempt to shore up prices that have fallen by 50 per cent in three months.

Even if Libor rates continue to decline, analysts say stock markets will not be out of the woods given the sharp economic slowdown likely to occur over the coming months, which will become more and more evident as companies report their latest earnings.

'Equity markets are at least as worried about the economic outlook now as they are about the health of the financial system, though the two are related of course,' said Tony Dolphin, Director of Economics and Asset Allocation at Henderson Global Investors.

Earlier in Asia, South Korea's Kospi climbed about 2.3 per cent after the government's announcement on Sunday to provide up to US$100 billion to secure banks' maturing foreign currency debt and another US$30 billion for the banks.

Mainland China shares, meanwhile, recovered early losses to edge higher in spite of new government figures showing the country's economic growth eased to 9 per cent in the third quarter of this year - its slowest in more than five years.

The reading, while still robust, fed into anxiety that deteriorating financial and economic conditions around the world were damaging Asian growth.

Investors, though, were relieved by lower third-quarter inflation data and pledges of fresh government intervention to support the economy. Shanghai's key index, down more 0.7 per cent in the morning, ended 2.25 per cent higher at 1,974.01.

In Tokyo, shares moved higher amid hopes for better-than-expected corporate earnings. Panasonic Corp. jumped 8.87 per cent after the Nikkei business daily reported over the weekend that, helped by strong TV sales, the electronics giant would beat its interim operating profit forecast by more than 20 billion yen (US$291 million).

The dollar was little changed at 101.76 yen, while the euro was lower at US$1.3353. -- AP

KUALA LUMPUR
Malaysian stocks rose 0.5 per cent on Monday, tracking the trend on regional markets, dealers said.

They said a financial plan by the government to inject 1.4 billion dollars (S$2.06 billion) into the stock market provided positive news to investors.

The Kuala Lumpur Composite Index gained 4.28 points to close at 909.51.

Turnover was at 590.18 million shares valued at 1.06 billion ringgit (S$447 million) while losers outpaced gainers by 355 to 241.

'The local bourse tracked the rebound in regional bourses,' Mr Kaladher Govindan, research head at local brokerage TA Securities,said.

Mr Kaladher said investor sentiment remained weak going forward. 'We still see softness,' he said.

He said the 1.4 billion dollars for the local bourse was 'a small amount' compared to market capitalisation of about 680 billion ringgit.

Genting lost 0.88 per cent at 4.48 ringgit, while power giant Tenaga added 0.78 per cent at 6.50.

Communications giant Telekom rose 0.60 per cent at 3.36 ringgit and top bank

Maybank gained 3.92 per cent at 5.30.

SHANGHAI
Chinese share prices closed up 2.25 per cent on Monday led by property developers amid hopes that the government will roll out new measures soon to boost the sector, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, was up 43.36 points at 1,974.01 on turnover of 32.1 billion yuan (S$6.9 billion).

The Shanghai A-share index gained 45.46 points, or 2.24 per cent, to 2,073.49 on turnover of 32.0 billion yuan, while the Shenzhen A-share index added 16.74 points, or 3.16 per cent, to 546.75 on turnover of 14.3 billion yuan.

HONG KONG
Hong Kong share prices closed 5.3 per cent higher on Monday, as investors gained some comfort from plans by world leaders for a global financial summit, dealers said.

The benchmark Hang Seng Index closed up 768.80 points as 15,323.01.

Turnover was light at 53.75 billion Hong Kong dollars (S$10.18 billion), highlighting that investors remained cautious about the state of the global economy.

TOKYO
Japanese share prices rose 3.59 per cent by the close on Monday as investors hunted for bargains, encouraged by news of a planned summit by world leaders on the financial crisis.

The Tokyo Stock Exchange's benchmark Nikkei-225 index climbed 311.77 points to end at 9,005.59. The Topix index of all first-section shares gained 33.08 points, or 3.70 per cent, to 927.37.-- AFP, AP, BERNAMA, THOMSON REUTERS