Why Markets Across Europe Are Surging Today

Yesterday, Reuters reported that EU officials were pushing for a seven-year extension on the bailout loans given to Ireland and Portugal during the euro crisis in recent years.

Today, the “troika” of international lenders at the EU, ECB, and IMF made the recommendation official ahead of a meeting of Eurogroup finance ministers in Dublin taking place on Friday and Saturday.

European markets are on fire today, and bank stocks are leading the way higher across the euro zone. Spain is up 3.7 per cent, Italy is up 3 per cent, Germany is up 2 per cent, and France is up 1.9 per cent.

Bloomberg’s Finbarr Flynn & Brian Parkin have the details of the troika’s recommendation:

The troika and the EFSF “would advocate to extend the maximum average maturity by seven years as it appears to be the best compromise accommodating the constraints and preferences of debtors and creditors,” said the report, which was distributed to German lawmakers and seen by Bloomberg News. “Given the current volatility in the markets, quick implementation is recommended to maximise benefits in shielding Ireland and Portugal from possible contagion effects.”

EU finance ministers agreed last month to ask for recommendations on the “best possible option” for helping Ireland and Portugal regain full market access as they near the end of their rescue programs. Euro-area finance ministers will try to reach an agreement on extending rescue-loan maturities for Ireland and Portugal when they meet in Dublin, Dutch Finance Minister Jeroen Dijsselbloem said.

If the Eurogroup can’t come to an agreement on the matter this weekend, it will be deferred until next month’s meeting.

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