Markets gain on bailout fund decision

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Markets gain on bailout fund decision

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A ruling from a top German court paving the way for policymakers to take new steps to tackle the eurozone’s debt crisis meant European shares finished Wednesday’s session at fresh highs.

There was also a fall in the amount of interest that the Spanish and Italian government had to pay to get investors to buy their government bonds.

The decline in Spanish bond yields to well below 6.0 percent prompted Spain’s Prime Minister Mariano Rajoy to say improved market conditions may make aid unnecessary.

Spanish economist Ignacio Cantos with investment firm ATL Capital said: “This decision was expected. Now, events can take their course and things will calm down. And so the risk premiums will fall because the situation allows for that. In other words, if you remove the possibility of the euro breaking up it stabilises the markets.”

The euro rose to its highest level since mid-May.

It has been the best-performing major global currency since the European Central Bank pledged to do whatever was needed to “preserve” it at the end of July.

It was been over $1.29 on Wednesday and rose to a two-month high against the British pound.