Stock markets welcome euro deal

(EPA)

World markets continued their rally today after eurozone leaders agreed a new 109 billion euro (£96 billion) rescue deal for debt-laden Greece, allaying fears of the collapse of the single currency.

Markets rose yesterday on the prospect of a deal being reached and made fresh gains today after details were revealed last night.

The FTSE 100 Index in London was up 0.5% today, building on gains of a similar scale yesterday, while in the US the Dow Jones Industrial Average had risen more than 1% overnight.

French and German markets made similar advances and the euro rose to 1.13 against the pound.

Barclays, which has large exposure to Spain and Portugal, which were also seen as being at risk of default, was the biggest riser on the London market, up nearly 4% on top of yesterday's gains of 8%.

Taxpayer-backed Royal Bank of Scotland was up more than 3%, building on yesterday's surge of 6%.

There has been widespread volatility in markets in recent weeks as investors fretted that Greece could default on its massive loan repayments, which would spark chaos in financial markets across the world and could even bring down the euro.

But an emergency summit in Brussels saw a radical new deal hammered out which has brought relative calm to the markets.

Investors are piling back into stocks and appetite for risk is returning as the eurozone's collapse looks less likely in the wake of the deal.

Kathleen Brooks, research director at Forex.com, said: "The latest breakthrough on a second bailout for Greece is enough to keep the markets happy for the next few months.

"It's holiday season, people are dreaming of sandy beaches, so we think the markets will accept this plan as more of a plastercast than a Band-Aid that will go some way at least to sorting out Greece's problems."

Some analysts think the rally will be short-lived, as more details of the deal emerge and worries persist over the size of Greece's debt mountain.