Shares have snapped back from recent falls with the All Ordinaries index closing up 2.37 per cent to 5312.7 and the S&P/ASX 200 jumped 2.45 per cent to 5338.6 after Wall St had its largest one day rise for 2014.

The turnaround was driven by recovery in financials and the hard hit resource sector which has been feeling the brunt of commodity collapses that have seen iron ore prices halve and oil down 40 per cent.

The Australian dollar continued to climb from yesterday’s lows of just over US81c trading up US.13c to US81.78c.

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Among Australian stocks Westpac was up 2.85 per cent to $32.48,  QBE Insurance  gained 3.4 per cent to $10.97.

BHP Billiton rose 2.55 per cent to $28.95, shading a 0.54 per cent gain for Rio Tinto to $56.29.

Energy firms did well, with Santos up 1.63 per cent to $7.99 and Woodside 0.59 per cent to $37.77.

Woolworths gained 0.49 per cent to $29.89 and Telstra gained 0.12 per cent to $5.89.

Medibank Private lost  ground, falling 0.4 per cent to $2.29.

In the US the Dow Jones Industrial Average ended 2.4 per cent higher at 17,778. and the S&P 500 also added 2.4 per cent to close at 2,061, capping its biggest two-day climb since November 2009.

The optimism in the markets stems from yesterday’s statement from the US Federal Reserve that it would not move quickly to end its loose monetary policies and raise interest rates despite a strengthening economy and predictions that unemployment would fall to 5.4 per cent.

In Europe London’s FTSE gained 2 per cent to 6466.06 and Germany’s DAX rose a healthy 2.79 per cent while the Eurostoxx jumped 3 per cent.

European trade was also buoyed by comments from Greek opposition leader and potential head of state Alexis Tsipras who tried to alleviate concerns he would plunge the country back into an economic crisis if elected.

The Russian crisis is not over with the rouble losing another 1.3 per cent against the greenback overnight, giving up part of an 11.4 per cent bounce the day before after the central bank had raised interest rates from 10.5 to 17 per cent.

Equity markets are taking comfort in the Fed’s pledge to be “patient in beginning to normalise the stance of monetary policy.”

A short-lived rally in oil prices, mostly during European trade, helped gains initially but prices fell  again once traders turned pessimistic on worries of a glut Saudi Arabia’s oil minister Ali al-Naimi was reported as dismissing speculation that he and other OPEC members were in discussions to reduce production.

Brent crude was down 2.5 per cent at $US59.76 (A$73.14) and Singapore’s Tapis crude was down $US3.63 from its previous close to $US61.80.

A key spot iron ore price recovered slightly to $US68.00 a tonne.

Gold was down to $US1,198.06 an ounce.