Markets in Europe and Asia have risen in response to the bailout of Spain’s banks that was agreed over the weekend.
On Saturday, eurozone ministers agreed to lend Spain’s banks up to 100bn euros ($125bn; £80bn).
The FTSE 100 in London rose 1.0%, the Dax in Frankfurt was up 1.9% and the Cac 40 in Paris was up 1.6%. Spain’s benchmark index, the Ibex, rose 2.6%. All had earlier made bigger gains.
The euro gained half a cent against the US dollar.
Spain’s weakest banks were left with billions of euros of bad loans following the collapse of a property boom and the subsequent recession.
Earlier, the Nikkei in Tokyo closed up 2.0%. The Hang Seng in Hong Kong closed up 2.4%.
On the bond markets, the yield on Spanish 10-year bonds briefly dropped below 6%. Bond yields are taken as an indication of the interest rates that governments would need to pay to borrow money.
European banks led the stock market gains, with Lloyds up 4.9%, Barclays up 3.1%, RBS up 3.2%, Credit Agricole up 4.4%, Societe Generale up 3.3%, Commerzbank up 2.5% and Deutsche Bank up 3.1%.
The exact amount of emergency funding that Spain will receive will be decided after two audits of its banks are completed within the next few days.
Spain is in its second recession in three years and the economy is expected to shrink by 1.7% this year.
“The Spanish announcement is not a solution to the eurozone’s ongoing woes, but it is a statement of intent,” said Richard Hunter from Hargreaves Lansdown stockbrokers.
“Some much-needed time has now been bought in Spain, which will allow the market an at least temporary sigh of relief.”
