EU summit deal sends shares, euro sharply higher

LONDON: European shares were sharply higher and the single currency
surged over 1 percent on Friday after euro zone leaders agreed a deal
to stabilize the region's debt markets and recapitalize its banks,
easing the funding strains on Spain and Italy.
The deal caught
markets by surprise, sending safe-haven German bonds and the dollar
lower, while prices for gold, oil and copper rose by over 1 percent.
Ten-year Spanish and Italian bond yields fell to 6.44 and 5.84 percent,
respectively.
After an all-night session, the leaders of the
17-nation currency bloc agreed that euro-area rescue funds could be
used for sovereign debt purchases without forcing countries to adopt
extra austerity measures.
They also agreed that, once a single
supervisory body for euro zone banks has been created, the funds could
be lent directly to banks for recapitalization without penalizing
existing debt holders.
"Definitely some good news for risk
markets here, though it is not the 'big bazooka'," said Sean Callow,
senior currency strategist at Westpac in Sydney, referring to a lack of
a reference to the issuance of common euro bonds.
The euro
soared 1.25 percent to $1.2595 on the deal, having earlier hit a high
of $1.2628, some way above its low of $1.2407 touched on Thursday.
The
FTSE Eurofirst 300 <.FTEU3> index of top European shares opened
1.6 percent higher, helping send MSCI's world equity index
<.MIWD00000PUS> up 1.2 percent to 302.07 points, its biggest
daily gain of the week.