LONDON – European stock markets and the euro soared yesterday as investors welcomed news that the eurozone has agreed to lend Spain up to 100 billion euros ($125 billion) to save its troubled banking sector.

In late morning deals, London’s FTSE 100 index jumped 0.96 percent to 5,487.94 points, Frankfurt’s DAX 30 advanced 1.94 percent to 6,249.56 points and in Paris the CAC 40 gained 1.69 percent to 3,103.42 points.
Madrid’s IBEX 35 advanced almost 6.0 percent in early trade, before pulling back to 6,721.8 points, up 2.59 percent.

Asian equities also rebounded sharply, with Tokyo up 1.96 percent and Hong Kong 2.44 percent higher.
The euro rallied to $1.2671 -- hitting its highest since May 23 -- in Asian trade. It later stood at $1.2602 in European deals, up from $1.2514 late Friday.

Brent oil prices meanwhile advanced back above the key level of $100 per barrel on hopes the Spain deal will ease concerns over the economic outlook.

“Spain’s 100-billion-euro deal has certainly pleased the markets, with Asian equities rising strongly and European equity markets up,” said Rebecca O’Keeffe, head of investment at online brokerage Interactive Investor.

“Europe’s bond markets have reacted positively with periphery countries all benefitting and tightening versus core countries, while the euro is back above $1.26. Consensus from all markets is overwhelmingly positive.”

Eurozone finance ministers on Saturday threw Spain a lifeline to save its stricken banks amid efforts to avert a broader financial catastrophe. Spanish Economy Minister Luis de Guindos insisted the handout was not a rescue but a loan that imposes conditions on the banks. However, it marked a dramatic climbdown for Madrid, which had denied it needed any outside aid.

The nation’s borrowing costs fell on Monday, but remained at levels widely regarded as unsustainable over the longer term. Spanish 10-year government bonds yields tumbled to a low of 6.017 percent from the previous close of 6.08 percent but then rose back to 6.23 percent. – Nampa/AFP