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Headhunters report the first tentative green shoots in the City jobs market since the collapse of Lehman Brothers last September.
Falling salaries mean banks are in a strong position to hire talent and the stock market revival of the last two months has boosted confidence.
Having axed thousands of staff in the past 18 months, London banks have created at least 500 new jobs in the City since the start of May.
Experts say the decision by Barclays Capital to go on a hiring spree has had a galvanising effect.
The investment banking arm of Barclays is to recruit 300 bankers in equities by the end of the year and the bulk will be in London. Insiders say there are also plans to recruit more bankers in mergers and acquisitions.
BarCap has already hired 450 staff in the last six months in London, across Europe and Asia, to add to the Lehman investment banking business that it bought in the United States last September.
Japanese firm Mizuho Securities is also recruiting 150 investment bankers in London. Mizuho said salary demands have dived by as much as 80%.
Standard Chartered is hiring 100 private bankers in London and elsewhere, and Italy's Unicredit is also believed to be expanding its operations in the capital.
Jonathan Evans, head of recruitment firm Sammons Associates, said: "BarCap is hiring a lot. It is like a chess board, as people move it creates spaces."
Richard Snook, senior economist at the Centre for Economics and Business Research, said: "Things have changed. The worst is over in the City. Firms are now snapping up the talent at a relatively low cost compared to recent history."
The centre has revised its forecast for City job losses this year, estimating 29,000 posts will now be lost rather than 34,000. From a peak of 353,000 City jobs in 2007, the CEBR reckons there will be 296,000 by the end of this year with a slight increase next year.
Snook said that the total number of City jobs is likely to shrink a little further during the rest of this year after the cull of the last six months: "In terms of City jobs, we still think the trend will probably be marginally negative between now and the end of year."
Adam Nicoll of headhunters GRS said risk managers and employment lawyers are also in strong demand, with tax professionals having a record first quarter this year.
