Stock markets sizzle on EU debt agreement

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Stock markets sizzle on EU debt agreement
BRUSSELS, BELGIUM (BDCi) – It came as a huge relief to the Global Finance Market today (27), when news of the European leaders had finalized the plan to contain the region’s two-year debt crisis.
The Long-awaited agreement focuses on reducing Greece’s debts and provides enough rescue loans to assist the country to surpass this crisis. Greek bank bond holdings will take 50 percent losses, a loss that officials believe will reduce Greek debt levels to 120% of gross domestic product (from 160% now) by the end of the decade.
Greece’s debt load reduction has been a challenge between the European leaders in coming up with a three-pronged rescue plan that the European Union hopes will reverse their escalating sovereign debt crisis.
However, this is just one of the three projects with which Europe needs to work on in order to prevent the threat of a worldwide recession
“These are exceptional measures for exceptional times. Europe must never find itself in this situation again,” European Commission President Jose Manuel Barroso said after the meeting.
Banks in Europe will also be forced to raise euro 106 billion ($148 billion) by June in order to subsidize losses on Greek debt.
Charles Dallara, the IFF managing director who served as the bondholder’s chief negotiator in Brussels said “The specific terms and conditions of the voluntary [haircuts] will be agreed by all relevant parties in the coming period and implemented with immediacy and force”.
Stocks responded swiftly with a 3 percent surge on Thursday on the news of the European agreement.
The Down Jones Industrial average was up 339.51 points, or 2.86 percent, at 12, 208.55. The Standard & Poor’s 500 Index was up 42.59 points, or 3.43 percent, at 1,284.59. The Nasdaq Composite Index was up 87.96 points, or 3.32 percent, at 2,738.63.
It was the strongest day for volumes since October 4, and the rise above the 200-day moving average may invite long-term buyers into the market in the coming days.
By: Jandra Bell
Source: Fox News; Financial times
27 October 2011
3:00p.m. P.D.T.

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