European stock markets closed sharply higher this evening after the US government launched a bailout of mortgage giants Fannie Mae and Freddie Mac, helping ease fears of a global financial meltdown.

In London, the FTSE 100 index jumped 3.9% to close at 5,446, despite computer problems that prevented trade for much of the day. In Paris, the CAC 40 index was up 3.4% at 4,340 and in Frankfurt, the DAX jumped over 2% to end at 6,264.

Dublin's ISEQ index rallied almost 7% to close at 4,569 - a gain of 287 points - on the back of much stronger financial stocks. Shares in Irish Life and Permanent soared 12.7% to close at €7.28, Anglo Irish Bank jumped 10.7% to end at €5.80 while AIB gained 11.5% to close at €8.80 and Bank of Ireland added 11% to close at €5.87.

Shares on Wall Street also rallied today after the US government's unprecedented bid to avert a financial system meltdown. The Dow Jones was up 1% to stand at 11,351 but after earlier strong gains, the Nasdaq had lost 0.5% to stand at 2,243 after 5pm.

Earlier, Tokyo's Nikkei index closed up 3.4% at 12,624 on the back of soaring financial stocks.