Governments across the world moved on Monday to shore up confidence in the global banking system with a slew of bank bailouts worth hundreds of billions of dollars.
Stocks markets reacted positively, with European shares opening up more than 4.5 percent following solid gains in Asia.
Britain said it would spend up to 37 billion pounds ($63.95 billion) buying into top UK banks. The move will likely see the UK government becoming the biggest shareholder in Royal Bank of Scotland and lender HBOS.
The French government will also create a 40 billion euro ($54.89 billion) fund to take stakes in banks, Dow Jones newswires said on Monday, citing a source.
France's finance ministry had no comment on the report but said a news conference was planned later in the day.
Germany and Italy were expected to make similar moves. The German bank rescue plan alone could be worth up to 400 billion euros, according to media reports, and is being fast-tracked through the parliament in Berlin.
Euro zone leaders held an emergency meeting on Sunday and hurried out plans to help banks through the worst financial crisis since the 1930s.
French President Nicolas Sarkozy said people could expect a flurry of coordinated announcements of financial details from national capitals across Europe, notably Paris, Berlin and Rome on Monday afternoon.
In tandem on Monday, European central banks said they would lend out as much U.S. dollar liquidity as commercial banks need for in a further joint bid to tame money market tensions.
In a joint announcement with the U.S. Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank said they would meet all bids from commercial banks at a fixed interest rate.
Australia and New Zealand earlier also guaranteed all bank deposits and Indonesia upped its guarantee to 2 billion rupiah ($203,000) while India pledged more liquidity to help financial markets.
The moves followed a weekend of crisis talks in the United States and Europe in which governments pledged to support the financial system, which has moved to the brink of collapse as it suffers from both steep losses in the credit market and a lack of trust in lending that has frozen the flow of capital.
The crisis has swept across financial markets, sending many stock markets into free fall. MSCI's main world stocks index, for example, has lost a quarter of its value since the beginning of October.
Investors appeared to be comforted by the government bailouts.
The pan-European FTSEurofirst was up 4.6 percent and Asian shares outside of Japan, which was closed for a holiday, gained 5 percent.
"We are arguably now near the end point in terms of the extremely violent sell off in equities and widening in spreads, said Sean Maloney, a bond strategist at Nomura.
But he added: "The recovery process is likely to be very long winded and will likely take about as long as the crisis has taken thus far."
"MASSIVE" ASSAULT
What world leaders have been trying to avoid is a repeat of the situation where the likes of Lehman Brothers were allowed to go bust.
The head of the IMF said the worst of the financial crisis was possibly over, and the Fund would draw lessons from the crisis to make proposals to reform the international financial system.
IMF Managing Director Dominique Strauss-Kahn said individual states should intervene when necessary according to their own specific needs, but it was important that any intervention should be "massive."
Underlining this, three major British banks could take 37 billion pounds in government money to boost their capital, the UK Treasury said.
Royal Bank of Scotland said in a statement it will boost its capital by 20 billion pounds, including the UK government taking 5 billion pounds in preference shares and 15 billion pounds underwritten by the government.
HBOS and Lloyds TSB will also participate in the government scheme "upon successful merger," the Treasury said in a statement.
Barclays said in a separate statement it would boost its capital by more than 6.5 billion pounds but expected to do so without government help.
"It's necessary because we are going through quite extraordinary circumstances the world over and I'm determined to do everything we can to stabilize our banking system and make it stronger," British finance minister Alistair Darling said.
