The market is up mainly on some optimism about the Europeans leveraging their rescue fund and possibly due to re-balancing of portfolios at the end of the quarter where portfolio managers sell outperforming assets and buy under-performing assets. In the current situation it would be moving out of bonds into equities as bonds have done very well this quarter.
The FT has a really good article on what are the next steps in Europe. The article also has a calendar of events about the different meetings in Europe which is something I have been trying to get a hold off. This will be a long drawn out process so the high level of volatility may stay with us for some time.