Mass coordinated action from the world’s major central banks caused a huge surge in global markets today.

The central banks of the US, UK, Japan, Switzerland, Canada and the European Central Bank (ECB) announced a cut to interest rates on ‘dollar swaps’ by 50 basis points.

The rate cut will make it cheaper for other central banks to access dollars and will serve to boost liquidity in the global financial system in order to stave off another credit crunch.

Markets reacted positively, with the FTSE 100 surging more than one hundred points in minutes before closing this afternoon up 3.16 per cent at 5505.42, the biggest daily jump since 6 October.

Indices soared around the world, the US markets all opening up over 3 per cent, while the German DAX rose nearly 5 per cent. Commodities prices also benefited from the rally. Gold and oil were both trending higher.

The FTSE 100 mining sector was the beneficiary of this rise in commodities prices, with Chilean firm Antofagasta leading the market Up, making a 9.23 per cent gain. The major banks were also up over 5 per cent.

Bucking the upward trend was utilities provider National Grid, down 2.57 per cent, and Cairn Energy, down 0.98 per cent after failing to make a significant commercial discovery from its Greenland drilling operations.

Analyst reaction to the decisive action from central banks was largely positive, although there was broad consensus that it was merely a short-term boost and that it would not solve the underlying long term problems.

Mark Kelly, special situations strategist at Olivetree Securities, commented, ‘We firmly believe that this will be positive for Eurozone banks, those with junk credits and those with liabilities in US dollars and earnings streams in another currency.’

However, Yusuf Heusen, sales trader at IG Index, warned, ‘Against the backdrop of the Eurozone debt saga, it's difficult to think we're out of the woods.

‘Today's rally may have offered up an early token of festive cheer, and indeed there may be more sessions like this to come, but as is always the case in the run up to Christmas, the prospect of a few hangovers seems inevitable.’