The FTSE 100 Index has closed 11.8 points higher at 5478.8 after reports that the US Federal Reserve, Bank of Japan and Bank of England were drawing up plans to cushion the blow of a Greek default.
The London market kept its head above water on hopes that central banks globally are ready to act if this weekend's election in Greece ultimately leads to the debt-laden country leaving the euro.
The pound was up against the euro at 1.23 as the single currency weakened ahead of Sunday's Greek poll, while sterling was also ahead against the US dollar at 1.56.
Nigel Stockton, the Financial Services Director at Countrywide estate agency, has said that he "will only start putting the bunting back out" when he sees how the credit being offered to British banks is deployed.
He said: "The market needs specific mortgage lending targets and increased gross lending targets. Without these targets, there is a real danger that this money will again be used by the banks for balance sheet management and not to increase mortgage lending."
The Chancellor George Osborne has said whilst the UK has some way to go before it is out of recession, the measures he announced last night will have a direct impact on households and businesses:
It is too soon to say whether the measures announced last night to get banks lending again will kick-start the economy. A vice-chairman of a large bank in the City told me that a lot more detail is needed before that is known.
The size of the offer is impressive and the timing - in the midst of a deepening Euro crisis with Greek elections around the corner - is very encouraging. For the Treasury to be talking in terms of tens of billions of pounds is psychologically comforting to investors, as the markets reflected today.
The key will be whether the incentives offered to banks are strong enough. Many bank may be reluctant to take on any extra risk in the current financial climate, and the same can be said of businesses and their appetite for borrowing.
The City A.M. editor Alistair Heath has said that the measures to get banks lending may encourage them to take greater risks, of the type that led to the sub-prime mortgage crisis in the United States. He told the BBC's World At One:
There is a real risk that this would trigger more risky lending ... It is very important that the banks remain prudent. We all remember what happened with sub-prime lending.
Paul Smee, the head of the Council of Mortgage Lenders, has told ITV News that the Government's new lending measures for banks are "broadly to be welcomed". He said:
– Paul Smee, Director General, Council of Mortgage lenders
It is very difficult for me at this juncture to comment on what the effect will be on pricing. A lot of factors go into a decision on how to price a mortgage loan, however I can see this will be a positive factor.
UK is now the only country in the G20 except Italy in a double-dip recession.
Pierre Williams, a spokesman for the Federation of Small Businesses, says that whilst a majority of small businesses want to borrow money many are rejected by banks' lending criteria.
He told ITV News it is vital that the Government ensures any money lent to banks ends up with businesses and not as bankers' bonuses.
The head of the Federation for Small Businesses has released this statement is response to the Government's announcement of new lending measures for banks:
– John Walker, National Chairman, Federation of Small Businesses
The banks have long said that it is a lack of demand that has reduced lending, but the FSB’s own research shows of those firms applying for credit around 40% are rejected ... We are pleased thatthe funding will be available in the coming weeks. However there must bea clear reporting process to provide tangible evidence the money is beingpassed on to small firms and not just shoring up the banks.