The Aussie market bounced back from last Monday's plunge, finishing the week stronger amid hopes Europe's leaders are making progress on the region's debt crisis.

Initial fears about a Greek default gave way to optimism over moves to recapitalise the eurozone's struggling banks.

The ASX 200 jumped 154 points (+3.8%) for the week, closing at 4163.

Resource stocks were the week's best performers, as fears of a European-led recession eased. BHP Billiton (ASX:BHP) rose 6.2% and Rio Tinto (ASX:RIO) climbed 7.4%.

Sundance Resources (SDL) put on 3.5% for the week after accepting a revised takeover offer from Hanlong.

The energy majors also enjoyed strong gains; Woodside Petroleum (ASX:WPL) added 8% whilst Paladin Energy (ASX:PDN) surged 27.6%.

Financials rallied alongside their global counterparts, with Westpac Bank (ASX:WBC) up 4.4% and National Australia Bank (ASX:NAB) advancing 6.2%.

Economics

The week's key economic event was the RBA interest rate decision, and as expected, the central bank left the official cash rate unchanged at 4.75%.

The RBA indicated that it would wait on the 3Q CPI figures before contemplating whether to cut interest rates.

It acknowledged the economic turmoil gripping the US and Europe, but said it was too early to gauge the impact of this on the world's other economic regions.

The RBA further noted that inflation was likely to remain within its preferred 2% – 3% target band in 2012 and 2013.

In other economic news, Australia's trade surplus widened to $3.1 billion in August, from $1.8 billion in July. The increase was higher than expected, and was driven by a surge in coal and iron exports.

Building approvals spiked 11.4% in August, much higher than economist forecasts of a 0.6% rise.

Retail sales also rose a stronger-than-expected 0.6% in August, following on from a 0.6% gain in July.

A now 10 month pause in the RBA's monetary tightening cycle was the likely catalyst for the increase in retail sales and building approvals.

Retail sales were also being supported by the weaker Aussie dollar, which is prompting consumers to re-direct their spending on domestic goods.

Overseas

It was a broad-based rally on global markets last week, with investors pinning their hopes on reports EU leaders are pressing ahead with plans to recapitalise the region's lenders.

With Greece on the verge of default, the ECB announced plans to provide unlimited year long loans to eurozone banks.

The move would aim to keep liquidity flowing in financial system in the event of a Greek default, and give banks time to repair balance sheets that are being strained by their sovereign debt holdings.

The EU progress lifted the region's indices, with German, France and the UK all rising more than 3% for the week.

In the US, the Dow (+1.7%), S&P500 (+2.1%) and Nasdaq (+2.7%) strengthened ahead of Friday's stronger-than-expected September jobs report.

Most commodities bounced back amid easing fears of another global recession. Oil surged 4.8%, whilst nickel (+7.4%) and copper (+5%) were among the best performing base metals.

There was little movement in the Asian region, with the Shanghai Composite closed due to Chinese National Day Celebrations.

The Hang Seng strengthened 0.7% for the week whilst the Nikkei fell 1.1%.