Traders brushed aside rumours that the US government's stress tests would require the banking sector to raise significant new capital. Instead, further gains for equity markets and better-than-expected US employment data set a positive tone.
Crude oil prices continued to retreat on Thursday, in spite of Opec announcing the largest supply cut in the cartel's history on Wednesday in its latest effort to stabilise the market.
Oil prices fell after the US Senate rejected a $14bn bail-out plan for the carmakers' sector, a move that weighed heavily on sentiment towards commodities.
Merrill Lynch warned that oil prices could fall as low as $25 a barrel next year if the recession affecting the US, Europe and Japan extended to China, the main driver of demand growth in commodity markets in recent years.
Trading across global markets remained volatile on Thursday, and the nerves of investors were tested by dollar weakness and continued worries about the deteriorating health of the financial system.
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