Britain's FTSE 100 was 181.11 points, or 4.6 percent, higher at 4,113.17, despite some hefty falls in the banks that have accepted government help. Wall Street was also projected to open up substantially higher.
A rally late Friday on Wall Street, overnight gains in Asia and coordinated attempts by European and U.S. authorities to prop up the banking system brought a measure of relief after last week's stock market drubbing.
The latest coordinated move emerged earlier when top central banks - including the U.S. Federal Reserve and the European Central Bank - unveiled new measures to thaw frozen credit markets and bolster funding to banks. They joined the Bank of England and the Swiss National Bank in saying they would provide unlimited U.S. dollar funds to financial institutions. The Bank of Japan said it was considering similar measures.
The banks' action came after leaders of the 15 countries using the euro said Sunday they would guarantee new bank debt until the end of 2009, allow governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion.
"Fortunately for the markets, the euro zone leaders, inspired by the British government's action, fashioned a more positive set of proposals at their emergency meeting," said Stephen Lewis, an analyst at Monument Securities in London.
The rescue measures agreed in Europe echo those announced last week by the British government. The British government confirmed Monday that it is injecting a total of 37 billion pounds ($63 billion) into three leading banks - Royal Bank of Scotland PLC, Lloyds TSB PLC and HBOS PLC - in return for equity stakes. Taxpayers will own about 60 percent of RBS and 40 percent of the merged Lloyds TSB and HBOS. The merger has been renegotiated Monday too, so the amount of Lloyds TSB shares that HBOS shareholders will receive is lower.
French President Nicolas Sarkozy was to present the cost and other details of France's part of the package later Monday, while Chancellor Angela Merkel planned a special Cabinet meeting to hammer out the terms of Germany's package.
The key is whether the flurry of activity can actually break the logjam in credit markets. Despite the coordinated interest rate reductions announced last Wednesday, and massive liquidity boosts, the rates at which banks lend to each other continue to rise. That means banks are afraid to lend to each other, and raises the chance that they and other businesses won't get the credit they need to operate.
"The set of measures announced by the euro group this week end represents in our view a significant step forward in the management of the banking crisis and towards restoring some confidence in the inter bank market," said Jacques Cailloux, analyst at the Royal Bank of Scotland.
Early indications suggest that there may be some thawing in the credit markets. The British Bankers' Association said Monday that the London interbank offered rate, or Libor, for three-month dollar loans fell 0.07 percent to 4.75 percent. There are no overnight dollar rates because U.S. bond markets are closed for Columbus Day.
Earlier, Hong Kong's Hang Seng Index, which tumbled more than 7 percent Friday, soared 1,515.29 points, or 10.24 percent, to finish at 16,312.16
Australian and Singapore indices jumped more than 5 percent, while South Korean and Chinese benchmarks added around 3.7 percent.
In Japan, where the Nikkei 225 tanked nearly 10 percent Friday to close out its worst week in history, trading was closed for a public holiday.
Earlier in the day, Australia said it would guarantee bank and other lender deposits for three years.
In the U.S., investors were waiting to see if the Treasury Department's newly announced plan to buy equity in troubled banks would help stabilize the volatility on Wall Street. Lawmakers have urged quick action by President George W. Bush on the effort, to be funded by the $700 bill
Wall Street stock futures suggested a rebound was in store for the major indexes ahead of the opening bell on Monday. Dow Jones industrial average futures rose 398, or 4.76 percent, to 8,768. Standard & Poor's 500 index futures rose 51.30, or 5.76 percent, to 942.30. Nasdaq 100 index futures rose 62.00, or 4.83 percent, to 1,344.50.
In a volatile session Friday in New York, the Dow Jones industrial average fell 128, or 1.49 percent, to 8,451.49, gyrating within a 1,000 point range. The average had its worst week on record in both point and percentage terms.
Elsewhere in Asia, Indonesia's key index, down sharply in early trade, gained 0.9 percent after the lifting of a trading suspension, imposed last Wednesday amid a freefall in share prices. The upswing followed government measures to free up liquidity, including easing regulations for share buybacks and corporate financial reserve limits.
Oil prices rose, with light, sweet crude for November delivery up $3.33 at $81.03. The contract fell Friday $8.89 to $77.70, the lowest price since Sept. 10, 2007.
The euro was steady above $1.36, while the U.S. dollar recovered back above 100 yen.
AP Business Writer Jeremiah Marquez in Hong Kong contributed to this article.