Global shares rise on eurozone bank bailout deal

European and US stock markets surged on Friday after eurozone leaders agreed a bailout deal for the region's debt-laden banks.

In Greece, the Athex index of leading shares rose 5.63%, led by its banking stocks.

In France the Cac 40 index rose 4.75%, while the German Dax index rose 4.33%.

In London, the FTSE 100 ended the day 1.42% higher, while the US's Dow Jones rose 2.2%.

Spain and Italy, the two countries likely to benefit most from the EU banking agreement, also saw shares gain. Madrid's IBEX index rose 5.66% to its highest level for two years, while Milan's FTSE MIB added 6.59%.

Banking stocks were the main winners, with Greek lender Eurobank rising nearly 16%.

With little to no expectations for success, the fact that it appears we are going to get something substantial is a real important positive for the market in the near term”

French banks Societe Generale and BNP Paribas both rose more than 9%, while in Germany, Commerzbank and Deutsche Bank, added 6.2% and 5.91% respectively.

Spanish and Italian bond yields - an indicator of government borrowing costs - also fell on news of the bank deal.

Italy's 10-year bond yields fell to 4.5%, while Spain's eased to 5.8%, way below the critical 7% mark considered the trigger point for countries to ask for bailouts.

The agreement will allow struggling banks to receive funding directly from the proposed European bailout fund, rather than via their governments.

This should help reduce government borrowing costs. However, it may not be until the end of the year before the bailout money becomes available.

Analyst Art Hogan, managing director of Lazard Capital Markets in New York, said markets were pleased with what eurozone leaders had agreed.

"We've gotten used to being underwhelmed by the outcomes, so with little to no expectations for success, the fact that it appears we are going to get something substantial is a real important positive for the market in the near term," he said.

However, other commentators were more sceptical.

"This is another Band-Aid," said Michael Woolfolk, senior currency strategist at BNY Mellon, also in New York.

"There was not anything material that came out of the discussion that would help resolve the crisis."

The euro also rose more than against the dollar, to $1.2671, reflecting new-found confidence that the eurozone debt crisis is finally being tackled by EU leaders.