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Whatever it takes: Stocks rise as leaders make eurozone pledge

There is speculation that the eurozone bailout fund and the ECB could buy-up Spanish bonds in a bid to alleviate fears about the single currency.

Jean-Claude Juncker arrives at a recent EU summit in Brussels.
Jean-Claude Juncker arrives at a recent EU summit in Brussels.
Image: Geert Vanden Wijngaert/AP/Press Association Images

MARKETS ROSE IN early trading this morning following comments from a number of senior eurozone leaders over the weekend that have indicated they will do whatever it takes it save the single currency.

Comments from the European Central Bank president last Thursday in which he vowed unconditional support for the single currency were backed up by German chancellor Angela Merkel and Italian Prime Minister Mario Monti over the weekend.

In interviews published yesterday, Eurogroup chief Jean-Claude Juncker said that the eurozone had reached a crucial juncture and its leaders would work with the ECB to save the single currency.

He said that leaders would decide in the coming days what measures to take to tackle the rising cost of Spanish bond yields with the European Financial Stability Fund working with the ECB to develop a plan.

Reuters reports that this plan could involve the eurozone rescue fund buying Spanish governments bonds on the primary market with the ECB making purchases on the secondary market.

“We will work in close agreement with the ECB, and we will, as Mario Draghi said, see results. I don’t want to drive expectations, but I must say, we have reached a decisive phase,” he is quoted as saying in interviews with Germany’s Sueddeutsche Zeitung and France’s Le Figaro.

London’s benchmark FTSE 100 index rose 0.38 per cent to 5,648.64 points in morning trade, the Paris CAC 40 added 0.71 per cent to 3,303.46 points and Frankfurt’s DAX 30 put on 0.56 per cent to 6,726.68 points.

Madrid meanwhile jumped 1.64 percent and Milan gained 2 per cent.

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But how the markets fare over the week will depend on what happens at various high-level meetings that are set to take place.

All eyes will be on the Federal Reserve when it wraps up a two-day policy meeting on Wednesday amid uncertainty over whether the US central bank will announce additional stimulus for the slowing American economy.

The following day, the Bank of England and the European Central Bank (ECB) will unveil their latest monetary policy decisions, as both grapple with the fallout from the ongoing eurozone sovereign debt crisis.

- with reporting from AFP

Read: Auditors to stay in Greece until new reforms are ready

Read: Merkel and Monti pledge to protect eurozone

About the author:

Hugh O'Connell

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