European shares rose strongly on Monday, after the US government took over the Fannie Mae and Freddie Mac mortgage companies on Sunday.
The bailout is the latest in a series of emergency steps taken by federal authorities in the United States.
Germany's DAX index closed 2.2% higher, the French CAC gained 3.4%, Zurich's SMI climbed 2.9%, the MIB 30 in Milan also rose 2.9% and Madrid's IBEX added 3.7%.
However, trading was halted on the London Stock Exchange for more than six hours due to a technical problem.
The FTSE 100 closed at 5,446.3 points, up 205.6 or 3.92%.
On Wall Street, the Dow Jones industrial average closed up 290.18 points, or 2.59%, at 11,510.49.
Standard & Poor's 500 Index finished up 25.48 points, or 2.05%, at 1,267.79. The Nasdaq Composite Index was up 13.88 points, or 0.62%, at 2,269.76.
Trading volume was light on the New York Stock Exchange: about 1.66 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion.
About 2.57 billion shares were traded on the Nasdaq, above last year's daily average of 2.17 billion.
The Australian share market made its biggest one-day gain in nearly six months after the announcement of the US bail out of Freddie Mac and Fannie Mae.
At the 1615 AEST close, the S&P/ASX200 had surged 190.4 points, or 3.9%, to 5067.5. The broader All Ordinaries strengthened 176.8 points, or 3.57%, to 5126.3.
The September share price index futures contract was up 217 points to 5091 on volume of 36,533 contracts.
In Japan, share prices closed up 3.38%.
The Tokyo Stock Exchange's Nikkei-225 index surged 412.23 points to close at 12,624.46.
The Topix index of all first-section shares jumped 45.57 points or 3.89% to 1,216.41.
The New Zealand share market was up 38 points to 3374 at the close on Monday on turnover of $67 million.
Fletcher Building rose 14 cents to close at $7.69, Contact Energy was up 35c to $8.71 and Telecom was unchanged at $3.15.
PGG Wrightson slid 17c to $2.55 after shareholders approved its plans to pay $220 million for a 50% financial stake in meat company Silver Fern Farms.
The Warehouse was up 1c to $3.23 ahead of its annual results release on Friday.
Air New Zealand rose 1c to $1.15 after announcing it will reduce trans-Tasman fares by 15%.
At 8.20am on Tuesday, the New Zealand dollar was trading at US67.23 cents, 82.25 Australian cents, 38.17 pence, 72.80 yen and 0.4749 euro. The Trade Weighted Index was at 64.17.