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It came as US Treasury Secretary Janet Yellen also signaled that Washington would protect people’s deposits if the recent spate of bank failures continued.

The S&P 500 was trading around 1% higher and the Dow Jones was close behind at 0.9% in early Tuesday trading.

The FTSE 100 posted its strongest day this year, closing 1.79% higher at 5,536.22 pence, buoyed by positive sessions for banking firms which rallied after a recent sell-off.

The resurgence on Tuesday came as Jeremy Hunt tried to reassure UK investors and companies.

Asked in the Lords Committee on Economic Affairs whether the UK financial system was “resilient enough”, he said: “It is the view of the Bank of England that the answer to that question is ‘Yes’.

“They think that the stress test they did, despite your question, shows that the system is resilient.

“I think we need to recognize that we are going through a period of change as we go from a period of extremely low interest rates to a period of higher interest rates. And that is causing, worldwide, adjustments that must be made and we must be vigilant.

Hunt also said he “fully supported” the decisions that led to UBS’s rescue takeover of Credit Suisse over the weekend.

NatWest rose out of the blue-chip index during the session on Tuesday, and its share price rose 5.7%. Barclays followed close behind with shares up 5%, while Standard Chartered and Lloyds were also trading higher.

Yellen is expected to say that overall, “the situation is stabilizing and the US banking system remains strong” in a speech to the American Bankers Association on Tuesday.

The comments follow the collapse of Silicon Valley Bank and Signature Bank earlier this month.

The failures were triggered by depositors rushing to withdraw money amid anxiety over the bank’s health, known as a “run on the bank.”

And last week, a group of the biggest US banks raised US$30bn (£24.5bn) in funding for regional lender First Republic Bank, but its share price plunged more than 45% on Monday.

In his prepared remarks, he says that the US government’s intervention in the two bank collapses was necessary to “protect the banking system in general,” after promising that all depositors at both banks would be protected.

“Similar actions could be justified if smaller institutions suffer runs on deposits that present a risk of contagion,” he says, noting that savers would be insured if another bank failed.

The Bank of England, along with six central banks from around the world, including the US Federal Reserve, joined forces on Monday to help contain the spread of the crisis by boosting dollar flows into the financial system.

It means that banks can borrow dollars from the central bank through the facility seven days a week.

But so far, no banks have used the swap line, suggesting that stress levels in the UK banking system are currently low.