The FTSE 100 rounded off its best month since 2003 and entered bull market territory, which is defined as a 20 per cent rise from recent lows, for the first time last night since the onset of the financial storm.
The index, which closed at 4,243.71, is up almost 21 per cent since hitting a low of 3,512.09 in early March, and up 8.1 per cent over April – its best monthly performance since April 2003.
At the same time, the FTSE 250 registered its best month on record, with a gain of more than 18 per cent.
Some analysts are suspicious about whether the strength can be sustained, but the increase coincided with bullish comments from the stock market guru Anthony Bolton, the president of investments at Fidelity International.
"All the things are in place for the bear market to have ended," Mr Bolton told Bloomberg. "When there's a strong consensus, a very negative one, and cash positions are very high, as they are at the moment, I'd like to bet against that."
Mr Bolton said the fact that almost all the research he had read characterised recent moves as a "bear market rally" only cemented his optimism.
"When everyone is extremely negative, I want to bet against that. If you wait for things to get better, you'll miss the rally." He said that recent record investments in American money market funds could fuel the bull market over the next two to three years.
Analysts attribute the upturn to improved economic and financial newsflow: these "green shoots", which include signs that China's stimulus package may be working and that the banking sector may be stabilising, have drawn investors back to markets.
"Some of the greatest fears regarding, say, the collapse of the financial system and the end of capitalism have subsided, and that coupled with better economic news has pulled us higher," Graham Secker, an equity strategist at Morgan Stanley, said. But he remains cautious, saying the upturn was a "cyclical rally in a structural bear market".
"Until recently, the short-term position and the long-term position were negative. Now the short-term position is positive but the long-term still looks negative," he said.