The world's leading central banks have agreed to provide additional dollar loans to European commercial banks that have found it harder to borrow because of their exposure to indebted European governments.
The European Central Bank said Thursday it will make three-month dollar loans to eurozone banks in coordination with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank. It says the new loans are meant to ensure that the commercial banks have enough access to U.S. currency through the end of this year.
The announcement appeared to give a boost to European bank shares and major European stock indexes. The Frankfurt DAX index and the Paris CAC-40 index surged about 4 percent at one point, while London's FTSE-100 index rose about 2.5 percent.
Greek crisis
German and French backing for the struggling Greek economy also lifted the markets, reassuring investors that Athens will not be defaulting on its debts anytime soon.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said Wednesday they believe Greece should remain a part of the 17-nation euro zone despite a debt crisis that has forced Athens to seek emergency funds from its EU partners and the IMF.
The debt crisis also has dampened economic growth in the euro zone. A European Commission report issued Thursday says growth in the region will reach a virtual standstill in the second half of this year.
Meeting planned
Merkel and Sarkozy were speaking to Greek Prime Minister George Papandreou in a 25-minute telephone call late Wednesday. Papandreou said Greece will meet its commitments to implement austerity measures in return for international assistance.
Eurozone finance ministers will meet Friday in Poland to discuss the Greek debt crisis. U.S. Treasury Secretary Timothy Geithner also will attend the talks.