BRUSSELS: Europe's leaders surprised skeptics with a bold plan to pump cash into troubled banks, reduce borrowing costs for Italy and Spain and stop forcing austerity on every government that needs aid.
Now their finance ministers have a week and a half to work out a lot of the details, and investors will be paying close attention.
Financial markets liked the broad outlines of the plans that emerged Friday from a meeting of the leaders of the 27 European Union countries.
Markets roared their approval after the EU leaders declared they would: - Centralize regulation of European banks and, if necessary, bail them out directly, instead of funneling loans through governments that already have too much debt.
- Ease borrowing costs on Italy and Spain, the euro region's third- and fourth-largest economies.
- Stop mandating painful budget cuts to every country in need of emergency financial aid.
-Tie their budgets, currency and governments more tightly.
The decisions made at the EU summit in Brussels won't end the crisis that has gripped Europe for nearly three years.
Plenty of questions remain about how the bank bailouts would work, whether there's enough money committed to rescue banks and governments and whether impoverished, indebted Greece will be forced out of the 17-nation euro club.
But for EU leaders who have consistently underwhelmed their exasperated publics and nervous financial markets, Friday's efforts marked a breakthrough.
The prime minister of Ireland - one of the five eurozone countries that have required emergency funds - said the plans marked a ``seismic shift in European policy.'
' British Prime Minister David Cameron said that ``for the first time in some time we have actually seen steps ... to get ahead of the game.''
There was an immediate sign that Europe's latest plan was easing fear in financial markets: The cost for the troubled government of Spain to borrow fell dramatically.
The interest rate, or yield, on the country's 10-year bonds fell by more than half a per centage point, to 6.34 per cent. The Dow Jones industrial average recorded its second-biggest gain of the year, and stocks advanced even further in Europe - in strong and weak countries alike.
The benchmark stock index in Germany rose 4.3 per cent, by far its best performance this year. Germany has the biggest economy in Europe, and a warm reaction there was a crucial sign of approval for the plan.
Prices for oil and other commodities shot higher, another sign that the plan may remove a big barrier to a healthier economy.
indiatimes.com
Now their finance ministers have a week and a half to work out a lot of the details, and investors will be paying close attention.
Financial markets liked the broad outlines of the plans that emerged Friday from a meeting of the leaders of the 27 European Union countries.
Markets roared their approval after the EU leaders declared they would: - Centralize regulation of European banks and, if necessary, bail them out directly, instead of funneling loans through governments that already have too much debt.
- Ease borrowing costs on Italy and Spain, the euro region's third- and fourth-largest economies.
- Stop mandating painful budget cuts to every country in need of emergency financial aid.
-Tie their budgets, currency and governments more tightly.
The decisions made at the EU summit in Brussels won't end the crisis that has gripped Europe for nearly three years.
Plenty of questions remain about how the bank bailouts would work, whether there's enough money committed to rescue banks and governments and whether impoverished, indebted Greece will be forced out of the 17-nation euro club.
But for EU leaders who have consistently underwhelmed their exasperated publics and nervous financial markets, Friday's efforts marked a breakthrough.
The prime minister of Ireland - one of the five eurozone countries that have required emergency funds - said the plans marked a ``seismic shift in European policy.'
' British Prime Minister David Cameron said that ``for the first time in some time we have actually seen steps ... to get ahead of the game.''
There was an immediate sign that Europe's latest plan was easing fear in financial markets: The cost for the troubled government of Spain to borrow fell dramatically.
The interest rate, or yield, on the country's 10-year bonds fell by more than half a per centage point, to 6.34 per cent. The Dow Jones industrial average recorded its second-biggest gain of the year, and stocks advanced even further in Europe - in strong and weak countries alike.
The benchmark stock index in Germany rose 4.3 per cent, by far its best performance this year. Germany has the biggest economy in Europe, and a warm reaction there was a crucial sign of approval for the plan.
Prices for oil and other commodities shot higher, another sign that the plan may remove a big barrier to a healthier economy.
indiatimes.com
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