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European Union Agrees to $955 Billion in Euro Support; Markets Soar

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Finance ministers from the 27-nation European Union hammered out a deal in Brussels early Monday, May 10, under which the EU Commission and the International Monetary Fund will make available some 750 billion euros ($955 billion) in lending support to some of the 16 eurozone countries like Spain and Portugal to keep those nations from suffering the same fiscal fate as Greece.

The May 10 deal was timed to send a message to the Asian markets after the volatility that was in evidence last week in tthe currency and stock markets. The move appeared to have been successful, as the euro strengthened in early trading against the yen in Japan, and as stocks rose in both Tokyo and Hong Kong.

In early trading in the U.S., the Dow Jones Industrials soared 404 points, or 3.9%, to 10,784 as of 9:45 AM Eastern time, while the Nasdaq rose 4.8% and the S&P 500 rose 4.4%.

In the official announcement of the action released following the meeting, the ministers said “In the wake of the crisis in Greece, the situation in financial markets is fragile and there was a risk of contagion which we needed to address. We have therefore taken the final steps of the support package for Greece, the establishment of a European stabilization mechanism, and a strong commitment to accelerated fiscal consolidation, where warranted.”

The deal followed 11 hours of talks on Sunday, May 9, and included confirmation of the support package designed to keep Greece from defaulting on its debt, with the ministers saying they strongly support “the ambitious and realistic consolidation and reform program of the Greek government.” Both Portugal and Spain, the ministers said, will consider similar “significant additional consolidation measures in 2010 and 2011″ and present those measures at a May 18 meeting of the finance ministers.