Equity markets worldwide rally on renewed hopes that Europe will solve its debt crisis.

Last week was a dark period for equity traders as stocks bounces up and down, creating losses and small gains for the major indices. Over the weekend, it seemed that European banks and countries were on the precipice of failure that could have had a devastating effect on currency and stock markets worldwide.

There was talk from traders of all walks of life that the Dow Jones Industrial Average would soon near the 8000-9000 level and the S&P 500 would dip below 1000. Those fears have been quelled for now.

The DJIA closed up nearly 300 points at 11,043 and the S&P rallied 2.3 percent to finish at 1162. European and Asian equities followed suit, closing higher. It appears that traders and bankers alike believe that the IMF, ECB and the rest of the central banks will get their act together and come to some kind of agreement to bail out beleaguered nations such as Greece.

Risk is back on as developed and even developing nations look to buy distressed European debt at bargain costs. As a result, commodities and particularly, precious metals, have been hit hard as investors ease out of their safety zone and stream back to Europe.

However, as one trader told Markets Media, “anything can happen.” One piece of bad news out of Europe can spell disaster for an already fragile equity market.