Financial markets began the week on a positive note, as traders convinced themselves European leaders would come up with a plan to resolve the eurozone's debt crisis that is worrying the global economy.
The Australian share market ended 1.6 per cent higher on Monday, and the Australian dollar jumped one US cent to a one-month high of $US103.50 at one stage, in anticipation of European leaders handing down a plan at the European Council and eurozone summit meeting on October 23.
Most other bourses were also in the black across the region.
Treasurer Wayne Swan, who is in London after attending the G20 finance ministers meeting in Paris on the weekend, said it was made "very, very clear" to the Europeans that, after "mucking around" on the issue for 18 months, a comprehensive plan was needed.
"Not just one that deals with Greece, but one that deals with the challenges of the banks in the European Union, one that deals with fiscal consolidation," Mr Swan told ABC Radio on Monday.
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He said there was no doubt at the meeting that the G20 was willing to work with the Europeans on ongoing solutions, "but in the first instance, there has to be a European solution".
While in London, Mr Swan will meet Chancellor of the Exchequer George Osborne and Bank of England governor Mervyn King to discuss the next steps to restore confidence in the global economy.
He will also address Australian business representatives in London and meet senior representatives of the investment community to get their assessment of financial markets in their regions.
Back in Australia, Finance Minister Penny Wong said global markets needed to see Europe acting to deal with the crisis.
"We need a very clear resolution because this is not just a European matter, this is a global matter," she told Sky News.
She said Australia was not immune from international economic volatility, but there was still a lot of strength in the local economy.
The positive tone of markets saw expectations of an imminent reduction in interest rates by the Reserve Bank of Australia (RBA) further wound back, although money markets are still pricing in a 60 per cent chance of a cut when the central bank board meets on November 1.
JP Morgan chief economist Stephen Walters said the recent notable shifts in the central bank's language made Tuesday's release of the minutes from its October 4 board meeting an important event.
RBA governor Glenn Steven's short statement after that meeting, when it left the cash rate unchanged for another month at 4.75 per cent, said inflation may now be more consistent with the 2 to 3 per cent target in both 2012 and 2013 than first thought.
"An improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary," he said.
However, Mr Walters believed the recent flow of economic data had been encouraging, pointing to a domestic economy continuing to expand, and lessening the chances of the RBA cutting the cash rate this year.
"Indeed, our base case remains that the RBA will be on hold for an extended period," he said.
New data released on Monday added to the recent rosier trend, including an unexpected drop in the jobless rate to 5.2 per cent, with total lending rising by 5.2 per cent in August, on top of the 3.5 per cent growth in July, to a 23-month high.
