US and European equities rallied at the end of a turbulent week dominated by fears about the financial sector as central banks take extreme measures to boost global growth.
The pan-European Stoxx 600, which lost 6.8 per cent over the previous four sessions, closed up 2.9 per cent as Commerzbank led a banking sector rebound with an 18 per cent surge after the German lender restored its dividend.
On Wall Street, the S&P 500, which closed on Thursday at a 22-month low, gained almost 2 per cent, supported by data showing that the US consumer does not appear to have been fazed by recent market turmoil.
“Markets are pricing a deep and long recession scenario that is simply not playing out in the data. Yes, it can come in the future, but consumer spending accelerating in January confirms that there is not much evidence of the negative wealth effects that markets worry so much about,” said Torsten Slok, chief international economist at Deutsche Bank.
US banks also got a boost after JPMorgan Chase revealed that chief executive Jamie Dimon had bought $26.5m of stock — a move painted as a vote of confidence in the sector.
A bounce in oil prices further bolstered sentiment, as traders trimmed positions in recently buoyant haven assets such as gold and highly-rated government bonds.
The Japanese yen, another perceived bolthole, traded 0.7 per cent softer at Y113.24 — but had been trading near 15-month highs towards the end of the Asian session.