Markets Rally As Euro Rescue Plan Looms

Further news of a new Euro zone rescue plan has pushed London's FTSE 100 back into the black this morning - as investors appear to be giving more consideration to the crisis measure.

The share index bounced back from an earlier loss of 1.7%, and by noon was nearly 1% higher.

However, all the European stock exchanges are expected to have another potentially turbulent week as they react to reports of a three trillion-euro bailout for the Euro zone following global share prices falls last week amid mounting frustration at the failure of leaders to resolve the Greek debt crisis.

On Friday, global stock markets first reversed a dangerous slide into what was potentially a second worldwide crisis - but later slipped back again.

Now, the bid by the developed nations of the G20 group who pledged to step in to stop the European debt crisis spiralling out of control seems to have kicked-in with sighs of relief all round as European shares stabilised this morning following the sharp falls.

In Washington, talks between G20 finance ministers were said to have concluded that Athens would be allowed to default on up to half of its debts and a plan to rescue the European single currency could be now be revealed within days, according to several reports.

It is believed to involve beefing up the European Financial Stability Facility (EFSF) and an injection of funds into a number of continental banks.

The plans would lead to an orderly default by Greece but allow the country to remain within the Euro Zone in a bid to relieve some of the economic pressure on Spain and Italy.

That said, the UK Chancellor George Osborne warned that decisive action was required within six weeks, saying the world had reached a "dangerous phase" amid fears of a renewed recession.

But, he said he was "optimistic" however that the gathering of colleagues from the G20 nations and a meeting of the International Monetary Fund (IMF) had made progress.

(BMcC/GK)