NEW YORK: World stocks surged and the euro jumped to a seven-week high against the dollar on Thursday after European leaders agreed on a sweeping plan to resolve the two-year-old euro zone sovereign debt crisis.
European shares climbed almost 4 percent and US stocks opened 2 percent or more higher on Wall Street in response to a deal that foresees private banks and insurers accepting 50 percent losses on their Greek debt holdings.
European leaders also agreed to recapitalize hard-hit European banks and a leveraging of the euro zone's rescue fund, the European Financial Stability Facility (EFSF), to give it firepower of 1.0 trillion euros ($1.4 trillion).
The euro gained 1.73 percent to $1.414.
Data that showed the US economy grew at its fastest pace in a year in the third quarter as consumers and businesses stepped up spending also helped spur buying of risk assets.
US gross domestic product expanded at a 2.5 percent annual rate in the third quarter, the Commerce Department said.
World stocks extended gains to hit their highest level since early August, with the MSCI all-country equity index gaining 2.5 percent and Europe's FTSEurofirst 300 to top regional shares surging 3.9 percent.
On Wall Street, the Dow Jones industrial average was up 246.95 points, or 2.08 percent, at 12,115.99. The Standard & Poor's 500 Index was up 31.60 points, or 2.54 percent, at 1,273.60. The Nasdaq Composite Index was up 66.27 points, or 2.50 percent, at 2,716.94.
A measure of investor sentiment, Wall Street's so-called fear gauge, the CBOE Volatility Index tumbled 16 percent.
Brent crude futures extended gains to more than $3, boosted by the European agreement to address its debt problems.
ICE Brent December crude rose $3.26 to $112.17 a barrel.
US light sweet crude oil rose $3.10 to $93.30 a barrel.
Prices of safe-haven US Treasuries and German Bunds fell, while those of highly indebted euro zone countries gained.
The benchmark 10-year US Treasury note was down 25/32 in price to yield 2.30 percent.
Spot gold prices fell $2.50 to $1,721.20 an ounce.
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