European markets opened mixed as EU leaders kicked off day two of their summit in Brussels.
They started the meeting by signing a German-backed fiscal compact that would restrict countries to debt-to-GDP ratios of 60% and annual deficits of 3%.
But the big focus today will be talk about the European Stability Mechanism–Europe’s permanent bailout fund. So far, Bloomberg reports that leaders have reached agreement on an expected effort to move up the fund’s implementation date. However, Germany is still providing steep opposition to any plan to increase the ESM’s 500 billion euro funding capacity, or to run the fund concurrently with the temporary bailout fund–the EFSF.
These developments follow sizable rallies in Asian markets last night, led by financials. The Hang Seng recorded gains of +0.82% while the Shanghai composite index rose a full +1.43%.