Markets have surged upwards following an agreement between European leaders on how to tackle Italy’s borrowing costs and ease the rules on bailout funds to help Spanish banks.
At close, the FTSE 100 was up 1.4 per cent to stand at 5571.15. Across Europe, the French Cac 40 and the German Dax were both up over 4 per cent. In Spain, the Madrid Ibex was up 5.7 per cent.
The FTSE eurofirst 300 is also up over 2.6 per cent, while in the US, the Dow Jones is up 1.8 per cent in early trades.
The jump in markets comes as investors have been moving away from safe havens to riskier assets in a bid to take advantage of the deal, which is designed to remove some of the anxiety over the fiscal condition of the eurozone.
The euro is up 1.93 per cent to the US dollar to $1.27.
Commodities have also seen a bounce with the price of Brent Crude Oil futures rising 4.5 per cent to $95.46 a barrel. The price of copper and zinc has also jumped by more than 2 per cent.
The news saw Italy’s 10-year bond yields fall to 4.5 per cent, while Spain’s eased to 5.8 per cent. This is some way below the critical 7 per cent mark considered the trigger point for countries to ask for bailouts.
F&C director of global strategy Ted Scott says: “Markets have given a muted thumbs-up to the outcome of the summit with equity markets up between 1 and 2 per cent and periphery bond yields falling.
“Overall, the summit went further than might have been expected thanks to some skilful and risky brinkmanship by Mario Monti of Italy. The main advance has been some real progress towards a banking union.It is being seen as a victory for the peripherals against the core countries, led by Germany.”