World equity markets rocketed over night as investors flooded back to capitalise on bargain share prices.

In the US the Dow Jones surged more than 11 per cent to 9387.61 points – the largest one-session gain in 75 years.

The London FTSE also posted a strong gain of 8.26 per cent after the British government invested £37 billion (A$92 billin) into three of the country’s biggest lenders – Royal Bank of Scotland, HBOS and Lloyds TSB.

The unprecedented investment will see the British government take majority control of the three banks, halt dividends and eliminate cash bonuses paid to directors.

Other measures to stabilise financial markets have now been announced right across Europe and stock markets have all recorded similar recoveries.