Markets up after surprise eurozone deal
Financial markets rose today after European Union leaders threw a lifeline to the eurozone's tottering banks.
David Cameron welcomed the deal hammered out by the leaders of 17-nation single currency bloc in the early hours of the morning, saying they had taken "some important steps".
The FTSE 100 Index rose 78 points on the news - a 1.4% increase - following the agreement in Brussels that struggling banks could have access to the EU's bailout funds without adding to government debt.
The surprise deal came after Italian prime minister Mario Monti and Spain's Mariano Rajoy faced down Germany's chancellor Angela Merkel in a tense summit showdown.
Mrs Merkel had come to the summit determined to maintain her hardline position, insisting that there were no short-term fixes on the table.
But she was forced to relent after Mr Monti and Mr Rajoy - with the backing of French president Francois Hollande - made clear they would block any further progress at the summit if they did not receive assistance to curb their soaring borrowing rates.
In response, the yield on 10-year bonds in Italy and Spain fell to 4.5% and 5.8% respectively, away from the unsustainable 7% mark which pushed Greece, Portugal and Ireland into taking a bailout.
The agreement finally came after Mr Cameron and the other nine non-eurozone leaders left the summit at around 1am, leaving the single currency bloc to thrash out their differences.
Arriving for today's final session, the Prime Minister said: "For a long time we have been saying that more action needs to be taken for short-term financial stability - more to recapitalise banks, to use firewalls to drive down bond spreads and interest rates to create greater stability.
"I think they took some important steps forward last night and I very much applaud that. There is still important work to do and that is what we will be doing today."
The "breakthrough" was announced by European Council president Herman van Rompuy.
"We are opening the possibilities for countries that are well-behaving to make use of financial stability instruments ... in order to reassure markets and get again some stability around some of the sovereign bonds of our member states," Mr van Rompuy said.
He said they had also agreed the establishment of a joint banking supervisory body for the eurozone.
The summit had expected to focus on a 10-year road map for reform of the eurozone, setting out proposals for a banking union, fiscal union - and leading ultimately to political union.
A report fleshing out the details of the plan will now be delivered to the next EU summit in October.
Mr van Rompuy said it would be "a specific and time-bound roadmap for the achievement of a genuine economic and monetary union".
"The aim is to make the euro an irreversible project," he said.
Shadow chancellor Ed Balls said: "This is a step forward. But I think you can see from the market reaction that it is not a big step forward.
"Yet again, the governments have muddled through and we have not had a decisive step forward. We have not seen the change we actually wanted to see.
"The European Central Bank has not been empowered. The ESF facility is not strong enough. I'm afraid we are going to get back to the wrangling and we still have the Cameron/Merkel view which is that big spending cuts will get growth when that is clearly not working."
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
£9 per hour: Recruitment Genius: This role is based within a small family run ...
£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...
£46000 per annum: Recruitment Genius: This property investment firm are lookin...
£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...