Wall Street today made small in-roads into reversing last week's disastrous trading when American shares rose by more than 900 points after the UK and Europe unveiled plans to bailout banking systems.

The Dow Jones industrial average rose by 936.42 points to close at 9,387.61, after last week falling by 18 per cent as panic spread throughout stock markets over the future of the economy.

The London market remained robust after America opened, with the FTSE index of leading shares rising to close at 293.06 points to 4,225.12 after the Treasury details its proposals to sink £37 billion in the UK's largest banks in exchange for a stake.

France's CAC 40 index closed up 9.7 per cent at 3471.4 today after European leaders revealed proposals to pump billions of euros into banks as well as guaranteeing lenders loans. Germany's Dax rose by 10.8 per cent after its Government approved plans for a €500 billion bailout scheme.

Despite confidence returning to global markets, and the effort to protect banks, shares in Royal Bank of Scotland (RBS) and HBOS continued to decline.

HBOS saw its shares lose 33.6 per cent to 82.5p after it emerged that the terms of a takeover by Lloyds TSB had been changed in the light of the Treasury's plan to inject £17 billion into the two banks once a deal has been secured. Lloyds' stock also fell, by 18.80 per cent to 153.8p.

RBS shares also declined, by 8.37 per cent to 65.7p, just above the 65.5p per share price the bank will issue equity at to secure £15 billion. RBS will raise an additional £5 billion by selling preference shares to the Government.

It also emerged today that the Bank of England was joining other central lenders in pumping in billions of dollars into the wholesale market, where banks borrow money from each other, in a further move to ease funding costs.

In a joint statement, the Bank of England, the European Central Bank (ECB) and the Swiss National Bank (SNB) said they will swap their local currency in return for dollars supplied by the US Federal Reserve.

Conditions in the interbank lending market have eased, suggesting that banks are beginning to lend to each other more willingly.

The benchmark overnight three-month Libor, the average rate at which banks are lending to each other, dropped to 6.269 per cent today, down from 6.285 on Friday. The cost of borrowing dollars also dropped.

Overnight three-month dollar Libor fell to 4.753 per cent from 4.819 per cent.

The central banks said they would continue to work together and are prepared to take “whatever measures are necessary to provide sufficient liquidity in short term funding markets.”

The banks' statement echoes calls from Prime Minister Gordon Brown for the world's largest economies to work more closely together to secure the future of the global financial system.

Mr Brown said: "This is perhaps the first government to do what I believe a large number of governments are going to do over the next few days and it is about restoring trust and confidence in the banking system, which is absolutely essential.

“I spoke to President Bush last night after returning from Paris and we agreed the common ground for action in our two continents.”

He added: "I believe that only by global action can we fully restore the confidence that is needed and build the international financial order."

Gains in the UK and Europe follow a strong recovery in Asia where Hong Kong's Hang Seng jumped by 10 per cent in afternoon trading. Singapore shares rose 2 per cent though dealing rooms said that progress had been a white-knuckle ride through a series of wild dips and peaks.

Japan’s Nikkei is closed today for a national holiday Japan announced today that it is considering borrowing more dollars to pump into its system as well as guaranteeing depositors.

The MSCI index of non-Japanese Asia-Pacific stocks staged a 3.75 per cent rally as buying returned to many of the smaller emerging markets whose stocks shed about 20 per cent of their value last week

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