Australian shares leapt into the black after the Reserve Bank of Australia lowered its benchmark rate by 100 basis points, double the amount markets were expecting.
The benchmark S&P/ASX200 index jumped 1.1pc, or 50.5 points, to 4590.9, after being down as much as 3.3pc in morning trading when it hit its lowest point since October 31, 2005.
Shares had fallen sharply at the open after overseas markets dived overnight, while worries about global economic growth sent the Aussie dollar to a four-year low against the greenback.
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