PARIS (AP) — European stock markets shot higher Thursday as investors waded into riskier assets, emboldened by EU leaders' pre-dawn agreement to slash Greece's massive debts.
Oil prices rose above $92 per barrel while the euro gained strongly following the European summit dedicated to fixing a debt mess in Greece before it provokes a bigger debt crisis across the continent.
European trading was buoyant from the outset. Britain’s FTSE climbed 2.1 percent to 5,670.12. Germany’s DAX jumped 3.7 percent to 6,243 and France’s CAC-40 gained 3.9 percent to 3,297. Wall Street also headed toward gains, with Dow Jones industrial futures rising 1.6 percent and S&P 500 futures gaining 1.8 percent.
The Greek market rallied on hopes the early morning deal would finally lift the specter of government bankruptcy.
Shortly after opening Thursday, shares on the Athens Stock Exchange were up 3.46 percent at 800.55, with banking stocks up more than 10 percent — after suffering heavy losses earlier this week.
The hard-fought European deal requires banks to take on 50 percent losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional €100 billion ($140 billion) in rescue loans as a second bailout package for Greece.
EU leaders "stopped the hemoraghing," said Marc Touati, chief economist at Assya Compagnie Financiere in Paris. "We have saved the Eurozone and that’s the good news and that’s why the markets are reacting positively."
European leaders agreed early Thursday on a plan to provide Greece with more rescue loans to help relieve its crushing debt obligations. It will involve private investors taking bigger losses on the value of their Greek bonds, which would make Greece the first nation that uses the euro currency to be rated in default on its debt.
European Union President Herman Van Rompuy said the deal will reduce Greece’s debt to 120 percent of its gross domestic product in 2020. Under current conditions, it would have grown to 180 percent.
In addition, the €440 billion European Financial Stability Facility will be used to insure part of the losses on the debt of wobbly countries like Italy and Spain, rendering its firepower equivalent to around €1 trillion ($1.4 trillion).
Loose ends still need to be worked out, and the fundamental problem of low economic growth in the euro zone has not been resolved by the crisis summit, some economists warned.
"We have only saved it temporarily," Touati said. "Unfortunately the fundamental problem concerning the absence of growth, has not been resolved."
Shares in Asia posted solid gains earlier in the day. Japan’s Nikkei 225 index rose 2 percent to close at an eight-week high of 8,926.54. South Korea’s Kospi added 1.5 percent to 1,922.04. Hong Kong’s Hang Seng gained 3.3 percent to 19,688.70.
Australia’s S&P/ASX 200 jumped 2.5 percent to 4,348.20 after trading resumed following a 4-hour technical glitch.
Meanwhile, strong economic reports helped send Wall Street higher on Wednesday.
The Dow Jones industrial average gained 1.4 percent to 11,869.04. The S&P 500 index rose 1.1 percent to 1,242. The Nasdaq composite added 0.5 percent to 2,650.67.
Reports in the U.S. showed businesses ordered more heavy machinery and other long-lasting manufactured goods last month. That indicates businesses are still spending on equipment despite worries about a weak economy and Europe’s debt problems. Sales of new homes rose in September after falling for four straight months.
Benchmark crude for December delivery was up $1.98 at $92.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.97, or 3.2 percent, to end the day at $90.20 in New York on Wednesday.
Brent crude was up $1.87 at $110.78 a barrel on the ICE Futures Exchange in London.
In currencies, the euro climbed to $1.4003 from $1.3908 late Wednesday in New York. The dollar weakened to 75.83 yen from 76.20 yen.
