The FTSE 100 Index surged 5% ahead today as relief over a bailout for the euro sent investors piling back into shares across the globe.
The 750 billion euro (£650 billion) bailout package to prop up the single currency, agreed over the weekend, soothed nerves shattered by the Greek debt crisis and pushed markets higher.
The London market shed 2.6% on Friday after its worst week for 18 months but bounced back as progress in talks between the Conservatives and Liberal Democrats also eased fears of paralysis following a hung parliament.
Hong Kong's Hang Seng and Japan's Nikkei 225 pushed 2.5% and 1.6% higher respectively, with even bigger gains seen in Europe. France's CAC 40 soared almost 9%.
Investors were cheered by the deal to prop up the euro, which is backed by the eurozone nations and the International Monetary Fund and includes loan guarantees and direct funding.
Financial stocks hit hardest by the turmoil of last week made stellar advances, led by Barclays, which soared more than 15%.
It was followed close behind by Lloyds Banking Group, Royal Bank of Scotland and Asian-facing Standard Chartered, which all posted rises of 10% or more.
The share surge left all of the FTSE 100's companies in positive territory with the exception of oil firm BP, which has been hit by a major oil spill in the Gulf of Mexico. The group revealed clean-up costs are running at 350 million dollars (£234 million) so far.
City Index analyst Joshua Raymond said: "Risk appetite has been given a healthy boost this morning with the banks and miners posting some of the strongest gains we have seen for some time.
"The rescue package from the EU and IMF is a firm attempt to draw a line under this uncertainty and looking at the market reaction, it seems to have done the trick."
After being hit by a major sell-off last week, the euro climbed past 1.30 against the dollar following the bailout and stood at 1.15 against the pound. Sterling also approached 1.50 against the dollar after falling as low as 1.44 at the end of last week.
ING Bank analyst Carsten Brzeski praised the EU and the IMF for its "aggressive" action in tackling the sovereign debt crisis posed by Greece, which threatened to spread to other countries such as Portugal and Spain.
He said: "Eurozone policymakers surprised probably even the most optimistic observers by presenting a quick and forceful, unprecedented crisis package.
"It does not solve the fundamental fiscal problems but it gives countries now several years for swift action."