Markets soar after eurozone debt deal reached

Stock markets in Europe and Asia responded enthusiastically to the eurozone countries’ deal that prevents lenders crying default over Greece’s debt. The agreement has saved the European single currency, according to French Finance Minister François Baroin.

Admitting that there had been a “risk of explosion”, Baroin declared that the bailout deal, reached after a 10-hour marathon meeting in Brussels, “will get us out of this zone of turbulence … allow the economic rebound [and] stabilise the eurozone and world growth".

Morning trading saw markets soaring across Europe:

• Paris up 3.43 per cent to 3,278.9 per cent at 11 am;
• London's FTSE 100 up 2.11 per cent to 5,670.32 points;
• Frankfurt's Dax30 up 3.61 per cent to 6,231.79 points;
• Madrid up 2.71 per cent;
• Milan up 3.89 per cent;
• Stockholm up 2.76 per cent;
• Athens up 4.78 per cent.

Bank shares rocketed with the UK’s Barclays up 10 per cent and France’s BNP Paribas up 22 per cent to 33.7 euros.

Earlier Asian markets closed higher:

• Tokyo up 2.04 per cent;
• Hong Kong up 3.26 per cent;
• Seoul up 1.46 per cent;
• Sydney up 2.49 per cent.

The deal was sealed after banks agreed to write off 50 per cent of their investment in Greek bonds, more than double what they agreed in July. That will reduce Greek debt by 100 billion euros.

Eurozone states will mobilise 30 billion euros in guarantees for the rest of the Greek debt and a new 100-billion-euro bailout.

Banks will also beef up their capital buffers to absorb Greek bonds.

And Europe will tighten economic governance and fiscal discipline.

A Franco-German working group on the euro’s future will hold its first meeting on Monday, according to French National Assembl:y president Bernard Accoyer.

European Union Economic Commissioner Olli Rehn will be given the job of managing the euro, according to commission head Jose Manuel Barroso.

Greek government spokesperson Elias Mossialos declared Thursday “a historic day” but challenged opposition parties to fall into line behind the government in pushing through the measures required by Europe and international finance organisations.

Trade unions in Italy, which is identified as the next country most likely to fail, promised turbulence ahead, pledging to fight the austerity measures announced by Prime Minister Silvio Berlusconi after the Brussels meeting.

As well as holding the largest share of Greece's debt, French banks are heavily exposed to Italy's, according to media reports Wednesday.