Italy scores major goal in euro rescue deal

The Dow soared 277 points after European leaders agreed on rescue, but Germany may have gotten the short end of the stick. Above, Italian Prime Minister Mario Monti is congratulated on the progress.
CBS News

(CBS News) BRUSSELS - Wall Street had its second-best day of the year Friday. The Dow soared 277 points -- more than 2 percent -- and is up at 5.4 percent halfway through the year.

The market rallied after Europe agreed on a plan to bail out its troubled banks during the European Union summit at Brussels.

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It was a victory of two Mario's for Italy -- Mario Balotelli scored both Italian goals in a dramatic win over Germany in the European soccer championships, and Italian Prime Minister Mario Monti, who scored an apparent victory over German Chancellor Angela Merkel.

The two world leaders met at the EU summit to try to save the Euro -- and with it, the world's economy.

Monti had kept the EU leaders up most of the night insisting on a rescue deal for Europe's failing economies, without the suffocating austerity measures the Germans were insisting on.

In the end, Merkel backed down.

EU loans can now be funneled directly to failing Spanish banks, for instance, instead of having to be channeled through the Spanish government.

This would rescue the banks without adding to Spain's debt, which is why its Prime Minister, Mariano Rajoy, was smiling.

The Germans, however, weren't. They not only lost the soccer game, but many feel they've given Europe a credit card for which they pay.

Markets around Europe -- and even in Greece, the weakest economy -- soared.

But economists like Jean Pisani-Ferry warned early euphoria over a deal can go sour.

"The details are terrible. The details are extremely complex," said Pisani-Ferry. "Expect long negotiations on the details."

The EU leaders declared victory and left town. If this is real victory, a politician a long way away also wins -- an American president seeking re-election.

Without a European recovery, an American recovery continues to stumble. Good times in Europe, if they return, mean more chance of good times at home.

The European leaders have met 17 times prior to this meeting to solve the euro crisis. This is the first time they've declared victory and said they solved short-term and long-term problems with the euro. But there's still a lot more to be worked out and written in this deal.

  • Mark Phillips

    Mark Phillips is CBS News senior foreign correspondent, based in London.