London Stock Exchange
World markets rallied Friday after the so-called Troika - the European Commission, the International Monetary Fund and the European Central Bank - reached an agreement with Greek authorities on a belt-tightening plan for the economy.
An op-ed piece by China's premier saying his nation is balancing growth and keeping prices under control contributed to the rally.
London's FTSE and the DAX in Frankfurt rose about 0.7 per cent in midday trading, while the CAC 40 in Paris gained 1percent, according to CNNMoney report.
Asian markets finished with even greater gains. China's Shanghai Composite rose more than 2per cent . The Hang Seng in Hong Kong rallied about 2per cent and Tokyo's Nikkei gained nearly 1peer cent.
The European Commission said the Troika and Greek authorities reached a "satisfactory agreement on a set of measures to close the fiscal gap for the years 2011-2014."
The austerity plan still has to be approved by Greek parliament, where politicians are well aware that the measures implemented last year have helped to stagnate the economy. They've contributed to a surge in unemployment to 16.2per cent from 11.6 per cent in March 2010, according to Marko Mrsnik, the lead analyst in the Standard & Poor's downgrade of Greek debt on June 13.
"The Commission is looking forward to the voting of both legislative bills next week in the Greek Parliament," said the Commission in a statement. "These measures, once fully implemented, will enable Greece to meet the agreed targets and remain on track."
The Greek Parliament must approve the painful reforms, on top of the austerity measures that have been in place since last year, to win the last $17 billion of a $156 billion bailout package from other European nations that was granted in 2010. The new austerity measures would also clear the way for another potential bailout package to keep Greece functional going forward.
The parliament is scheduled to vote on June 28. This will be followed by a meeting of European Union finance ministers on July 3 to approve the final tranche of funding from last year's package.
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The European Council welcomed progress in Greece, but in a cautious tone, recognizing that the austerity measures still had to clear final hurdles with the Greek authorities.
"A comprehensive reform package agreed upon with the Commission, in liaison with the ECB and the IMF, and adoption by the Greek Parliament of the key laws on the fiscal strategy and privatization must be finalized as a matter of urgency in the coming days," said the Council, in a statement.
The new austerity measures would include reductions in the pay of public workers and an increase in the attrition of public jobs, placing further pressure on Greek workers and fanning the flames of violent protests that have occurred in Athens in recent weeks.