July 21, 2011
Stock markets and the euro rallied on Thursday after European leaders moved closer to hammering out a new rescue plan, including a "Marshall plan" to stimulate the Greek economy.
The euro gained more than one and a half cents to $1.433, after a draft agreement emerged from a crucial summit taking place in Brussels. This plan would give Greece, Ireland and Portugal more time to repay the money loaned to them through their recent bailouts.
Other weaker nations, potentially Italy and Spain, would also be offered "precautionary credit lines", in an effort to stop them requiring a full bailout.
Although an agreement may not come until late on Thursday, or on Friday, investors welcomed the details of the draft conclusions. The FTSE 100 erased early losses, and was up 28 points at 5881 in afternoon trading.
It also appears that Angela Merkel has succeeded in rejecting a new levy for the banking sector, proposed by France, and that the European Central Bank has conceded that Greece should execute a "selective default", in a process that could see private investors share some of the costs of a new rescue plan for Athens.
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