The FTSE 100 saw rises fuelled by a rally in banking shares as the Government and the Bank of England announced plans to pump in £100bn of credit into the economy.
Emergency measures to breathe new life into the economy were unveiled by Chancellor George Osborne last night with the money printing presses to be turned back on.
Bank of England Governor Mervyn King stood shoulder to shoulder with Osborne as they explained the plans at the chancellor's Mansion House speech.
Treasury officials said the government's move could support an estimated £80bn in new loans, while the central bank's separate scheme will provide monthly £5bn tranches of six-month liquidity to banks.
Top European central bankers have also signalled that they are ready to step in to take action depending on the outcome of an election in Greece this weekend.
The FTSE Eurofirst 300 index of top European shares was up 0.4 per cent at 987.46 points in early trade led by gains in financial stocks.
However Moody's downgraded ratings on five Dutch banks, including ING, serving to highlight the continuing fragility of economies across Europe.
In London RBS was the biggest climber up 6.5 per cent while Barclays rose a shade over five per cent. Lloyds lifted by 4.5 per cent.
Miner Vedanta was another top riser heading up by 4.2 per cent. In Engineering Weir Group put on 3.8 per cent.
On the down side temporary power supplier Aggreko dipped by 4.4 per cent.
iPhone chip maker Arm Holdings shed 1.8 per cent while BT Group was off by 1.7 per cent.
Broadcaster BSkyB nudged down by 1.4 per cent and British Gas owner Centrica slipped 1.4 per cent.
In Asia the Nikkei closed broadly flat while the Hang Seng was up 2.2 per cent.
Meanwhile the MSCI world equity index was up 0.2 per cent at 302.99 points - a rise of about 1.5 per cent for the month so far after a fall of over nine per cent in May.