BRUSSELS (Reuters) – European Union finance ministers yesterday pro-mised to counter the “wolfpack” of the financial markets as they sought agreement on a 600 billion euro ($805 billion) plan to keep Greece’s debt crisis from spreading.
The compromise measure under discussion included loan guarantees by euro zone countries worth 440 billion euros, a 60 billion euro stabilization fund and a 100 billion euro top-up of International Monetary Fund loans, EU sources said.
Financial markets have been punishing heavily indebted euro zone members, threatening to plunge them into Greece’s plight. The safety net being assembled was meant to protect other countries with bloated budgets, such as Portugal, Spain and Ireland.
Jitters over euro zone finances have set global markets on edge, and provided a backdrop for a nearly 1,000-point drop in the Dow Jones industrial average on Thursday, whose trigger remains a mystery.
Hopes the EU package would successfully tackle the crisis helped lift the euro, which gained almost 2 per cent against the US dollar and 3 per cent on the yen in early Asia trade. US stock futures also surged at the start of trade yesterday.
Moving swiftly to bolster Greece and instill some confidence in shaky markets, the IMF approved a 30 billion euro rescue loan as part of a broader combined EU-IMF bailout for the country totaling 110 billion euros.
The IMF said 5.5 billion euros from the three-year loan would be disbursed immediately.
To secure the funds, Greece has committed to budget-cutting measures so sharp that they have already caused violent protests.
