(AP) LONDON - Markets breathed a huge sigh of relief Friday after Europe's leaders agreed a series of.
Perhaps most importantly for markets, the 17 countries that use the euro currency agreed they will let funds intended to bail out indebted governments funnel money directly to struggling banks as well. They said the move will "break the vicious circle" of bank bailouts piling debt onto already stressed governments.
In the run-up to the meeting, investors had expected the summit - like so many meetings before it - would not produce a solution powerful enough to restore the confidence of markets.
Analysts said the proposals from the summit represented credible steps in the region's efforts the crisis. But they say that they are only first steps.
"Italy and Spain used their combined strength to wring significant concessions from Germany, providing investors with reason to think that a real solution to the eurozone crisis is not as far off as had been feared," said Chris Beauchamp, market analyst at IG Index.
In Europe, Germany's DAX was 2.6 percent higher at 6,309 while the CAC-40 in Francer rose 2.8 percent to 3,136. The FTSE 100 index of leading British shares was 1.4 percent higher at 5,569.
The euro was also buoyant, trading 1.2 percent higher at $1.2590.
Perhaps the greatest gauge of the markets' optimistic response to the summit declarations was in the bond markets. Yields on Spanish and Italian debt fell across the board. Spain's was down 0.31 percentage points at 6.59 percent. Spain recently saw its rate edge over the 7 percent level which is seen as unsustainable over the long term.
Wall Street also appeared headed for gains. Dow futures were up 1.1 percent while the broader S&P 500 futures rose 1.4 percent to 1,342.
Friday's rally started toward the latter end of the Asian session as the news from Brussels emerged and benchmarks in Japan, South Korea and Australia all reversed early falls to move higher.
Japan's Nikkei 225 index rose 1.5 percent to close at 9,006.78, its highest finish since May 10. South Korea's Kospi gained 1.9 percent to 1,854.01 and Australia's S&P/ASX 200 added 1.2 percent to 4,094.60.
Hong Kong's Hang Seng advanced 2.2 percent to 19,441.46.
Oil prices also rallied hard, with benchmark oil for August delivery up $2.44 to $80.13 a barrel in electronic trading on the New York Mercantile Exchange.