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In the US, the Dow Jones Industrial Average surged by almost seven per cent after the Obama administration announced its plan to help tackle toxic assets.
Following the news, shares in Royal Bank of Scotland and Barclays went up by six per cent, while Lloyds Banking Group saw a more modest rise of four per cent.
In a statement, the US government said it could not act alone in purchasing legacy assets, as the taxpayer would be forced to take on all the risk.
"Simply hoping for banks to work legacy assets off over time risks prolonging a financial crisis, as in the case of the Japanese experience," it commented.
President Obama has also pledged billions of dollars for renewable energy projects, saying that the investment could end the US' dependency on foreign oil, create 300,000 jobs and combat climate change.
