STOCK markets surged today after a lifeline worth up to 100 billion euro (£81bn) for Spain’s banks helped ease eurozone tensions.
The FTSE 100 Index jumped nearly 2% or 100 points, reflecting similar gains in Asia, after the European Union bailout secured vital breathing space for the beleaguered single currency.
The euro climbed 1% against the US dollar while Brent crude oil also lifted back above 100 US dollars a barrel amid hopes of improved global demand.
Financial stocks were among the major beneficiaries in London, with Barclays shares up 5% and insurer Aviva 4% higher. International Airlines Group, which owns British Airways and Spain’s Iberia, also jumped 4%.
Although the situation in the eurozone’s fourth biggest economy remains bleak, there are hopes that the eventual injection of support for its creaking banks will help to avoid the meltdown of the eurozone.
Chancellor George Osborne this weekend warned that the UK faces a lost decade unless the eurozone crisis is brought under control.
While the planned 100bn euro in European Union rescue funds has eased some nerves over Spain, further storms lie ahead for the eurozone.
The next key date for the euro currency union is Sunday when Greece holds an election that is being seen as a referendum on whether to stay in the eurozone or reject painful austerity measures.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: “The Spanish announcement is not a solution to the eurozone’s ongoing woes, but it is a statement of intent.
“Some much-needed time has now been bought in Spain, which will allow the market an at least temporary sigh of relief.”
A final figure on the size of the bailout will only be available later this month following the completion of two audits of the financial system. The cash is expected to come from the eurozone rescue fund.
STOCK markets and the euro exchange rate have rallied following the decision to provide Spain with a bailout.