Markets surge on European plan
Financial markets around the world stormed higher Friday after European leaders came up with a breakthrough plan to rescue banks, relieve debt-burdened governments and restore investor confidence.
The Dow Jones industrial average climbed 277 points, its second-biggest gain this year, and stocks advanced even further in Europe, in strong and weak countries alike.
The price of oil posted its biggest one-day increase in more than three years, and other commodities shot higher – signs of hope that a deal in Europe will remove a big barrier to a healthier world economy.
In Brussels, leaders of the 17 countries that use the euro appeared to have found a broad strategy to fight a debt crisis that has hounded European governments and world investors for three years.
The leaders agreed to pump money directly into stricken banks, let some countries tap into rescue money without submitting to stringent budget requirements and, later, tie European governments closer in economic union.
David Kelly, chief global strategist at JPMorgan Funds, said it was becoming clear that European leaders will compromise to solve the crisis. One of the biggest stock gains Friday came in Germany, which took a hard line in earlier negotiations.
“The whole language is positive here,” he said. “Every time they’ve stared over the cliff into the abyss of a euro breakup, they’ve realized it’s much wiser to get closer together.”
Previous market rallies tied to progress in Europe have proved temporary. But for the day, at least, global stock markets were jubilant.
Because of the economic fears and a deep slump in May as Spain’s banks teetered near collapse, the S&P 500 lost 3.3 percent for the quarter.
But the S&P 500 at least started the summer strong. It rose 4 percent in June, its best month since February and its strongest June since 1999.
For the year, the Dow is up 662.53 points, or 5.4 percent. The Nasdaq composite index is up 12.7 percent.
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