The Aussie markets bounced back strongly today amid hopes EU officials are progressing towards a solution to Europe's debt crisis.

Moves to bulk up the region's bailout fund were positively received by investors, helping to allay fears of a financial collapse in the event of a Greek default.

Financials drove the market's gains with all four big banks rising sharply. ANZ and Westpac put on over 5% each.

Beaten down resource stocks were back in favour, with BHP adding 4.1% and Rio Tinto advancing 5.4%.

Lynas flew 34.9% on concerns its recent sell-off was overdone. Reports China was cracking down on unlawful rare earths production also provided support.

The ASX 200 soared 135 points (+3.6%), closing at 4005.