- (Reuters/Yves Herman)
Markets worldwide had a strong showing on Thursday after European leaders at an emergency summit in Brussels finally came to an agreement about the euro zone debt crisis.
The euro climbed above $1.41, Asian markets rallied, and in the U.S. the Dow Jones Industrial Average rose above 12,000 for the first time since August.
News of the agreement came early Thursday, after political heads and financial leaders met for nearly 10 hours.
European banks agreed to cut the value of Greek debt 50 percent in an attempt to resolve a fiscal crisis endangering the euro’s value and the world economy.
The agreement would bring Greek debt down by 2020 to 120 percent of the country’s gross domestic product - a figure The New York Times calls “enormous but more sustainable.”
Political leaders were positive about the agreement. According to The Times, Chancellor Angela Merkel of Germany said, “I believe we were able to live up to expectations, that we did the right thing for the euro zone, and this brings us one step farther along the road to a good and sensible solution.”
The private sector agreed to the deal on the condition that the public sector contribute 30 billion euros, according to Charles Dallara, director of the Institute of International Finance, as reported by CNN Money.
In a statement, Dallara said, “We look forward to work with the Greek and European authorities to translate this framework into a concrete agreement that can deliver an early reduction in Greece’s debt and place it squarely on a path toward debt sustainability.”
Leaders from the banking sector agreed. Josef Ackermann, chief executive officer of Deutsche Bank and the chairman of the Institute of International Finance, released a statement saying, “We are very pleased with the agreement reached. The outcome is a good one for Greece, Europe, and the investors, and we look forward to its early implementation.”
While many details of the agreement still need to be worked out, investors are already welcoming the news. According to Dow Jones, Terry Morris, senior vice president at National Penn Investors Trust Company, said “I don't know how deep the details are, but at least they're moving in the right direction.”