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Tokyo - The euro surged on Monday after Europe and the International Monetary Fund agreed a $750bn aid package for Greece and its eurozone neighbours to stem a crisis that threatened global recovery.
The deal consists of €440bn from eurozone countries and €60bn of loan funds from the European Commission, while Spanish finance minister Elena Salgado said the IMF would offer a €250bn facility.
Following the announcement the US Federal Reserve and central banks in Japan, Europe, Britain, Canada and Switzerland said they would intervene to ensure that dollar shortages did not occur in European markets.
The single currency shot higher to $1.2931, up from $1.2755 in New York on Friday, while the traditionally safe-haven yen slid against its peers as risk appetite returned to the markets. The euro fell to a 14-month low against the greenback last week.
The huge bailout "proves that we shall defend the euro whatever it takes," the European Union's commissioner for economic and monetary affairs, Olli Rehn, told a press conference after 11 hours of talks in Brussels.
The European Central Bank will also implement exceptional measures in support of the bailout package, Rehn said.
The breakthrough followed urgent telephone calls Sunday between US President Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy.
The European Central Bank said in a statement that the moves by the central banks "are designed to help improve liquidity conditions in US dollar funding markets and to prevent the spread of strains to other markets and other financial centres."
Asian markets shot higher, with Tokyo up 1.30% by the break, Sydney up 1.68% and Hong Kong 0.82% stronger, while Seoul added 1.29%.
'Default risks for Spain and Portugal have eased'
"It's positive," Macquarie Private Wealth Division Director Martin Lakos told Dow Jones Newswires.
"Although difficult, this was always going to be managed and it would appear that this package will well satisfy markets and support the euro. It was always going to have a positive reaction on markets that were extremely oversold."
He added that attention may shift back to the US economy, where stronger jobs growth and strong corporate earnings could generate a solid bounce in equities.
"It's possible we've seen the lows from this crisis, notwithstanding anything out of left field," he said.
Asian markets were closely watching the eurozone after US markets Friday shrugged off upbeat employment data showing that 290 000 jobs were created in April in the world's largest economy.
Markets last week saw a sell-off amid uncertainty over whether Greece could implement deeply unpopular austerity measures and stave off bankruptcy.
Fears that a possible debt default by Greece could hit the world's financial system in the same way the collapse of Lehman Brothers did two years ago sent shares and the euro plunging.
Concerns had also mounted that the Greek rescue deal would fail to shield Spain and Portugal from crippling market pressures, sending the euro down at one point last week to €1.2523, its lowest since March 2009.
However, "given the package, default risks for Spain and Portugal have eased," said Satoru Ogasawara, a forex strategist at Credit Suisse in Tokyo.
But "it is yet to be seen if Greece, Spain or Portugal can reduce fiscal debts. For the euro's (fully-fledged) upturn, the eurozone economy needs to be on a track of sustainable growth."
Oil was higher. New York's main contract, light sweet crude for June delivery, rose $1.67 to $76.78 a barrel and Brent North Sea crude for June delivery gained $1.56 to $79.83.
Gold opened in Hong Kong at $1 202.00 - $1 203.00 ounce, up from Friday's close of $1 201.50 - $1 202.50.
- Sapa
