Markets rise on hopes for agreement to bail out the Greek

Germany, with an electorate angry on the nation to bail, juicy contributions previously suggested that Greece could restructure its debt.

The Germany was on Tuesday, said to consider to waive its claim that additional help must be provided that the holders of bonds of the Greek Government soon share some pain via a debt restructuring.

If so it would pave the way for "The Greece troika" creditors - the European Union, the Monetary Fund International and the European Central Bank - to agree more help for the responsible countries of debt after €110bn year last package (£ 96bn).

Developments have cheered investors, although reports have suggested that a restructuring of the debt was still on the table in the long term.

The FTSE 100 index of blue chip of Britain, increased points 51 12-0. 86pc - 5,989.99 while the euro rose above $1.44 to its highest level in three weeks.

Germany, with an electorate angry on the juicy contributions of the nation to bail, already suggested that the Greece could restructure its debt, perhaps by extending the terms of its loans. However, the ECB is vehemently to even this restructuring "soft".

The absence of agreement was worried markets, particularly as the IMF will not release its share of the last tranche of aid billion € because of the Greece unless that funding the nation's long term seems well established.

Fitch rating agency yesterday cut rating credit of Cyprus by three notches, citing the effects of the crisis of debt in nearby Greece.

Separately, a report of Ernst & Young estimates that Ireland, another beneficiary bail, emerge not recession until 2012, and that its debt holders may suffer losses.

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Greek bail out hopes increased after the German retreat

Traders reacted with relief that feared by default "uncontrolled" seems to be avoided. Performance of the obligations of 10 remote Greek years 117 basis points for the 16 251pc as markets grew in confidence.

However, the rating agency Moody injected a note of caution in the after markets closed European procedures by threatening to retire Italy of AA2, warning that he may fight to reduce its deficit and seek structural changes in the labour market.

Agreement between the two largest European economies on the Greece was regarded as essential before next week crisis Summit and talks this weekend with the Monetary Fund (IMF) International.

There were new hopes, that the international authorities shall agree tomorrow release billion € financial assistance indispensable to the Greece.

The euro rallied almost 1pc against the dollar to $1.434 after the Declaration of the leaders. The FTSE 100 reached 16 points 5715 after the fall of the stock exchange in early trade and European has also increased.

Markets were also encouraged that George Papandreou, Greek Prime Minister, was able to unveil a new Cabinet. The process must be delayed a day in the violent protests against austerity measures.

The EU and the IMF insisted the measures should be directed to the Greece to continue to qualify for international aid.

Defence Minister former Evangelos Venizelos would become a move welcomed by Mrs Merkel and Mr Sarkozy, Minister of finance, said Mr. Papandreou.

Markets has also reacted to rumours that European leaders were working on a fresh bailout of the Greece which can be as much as €150bn.

The leaders, who gave a joint Berlin press conference refused to set a date for a fresh-out Greek bail, although they said that it would also involve private investors.

Despite the developments, the rating agencies have previously argued that a bond exchange would contain clear elements of coercion and still count by default.

However, the European leaders insisted that a voluntary agreement would be not considered as a defect in the markets.

Ms Merkel said: "the central principle is a voluntary contribution," she said. "It is an important message to the banks. The fear is that we want to trigger a credit event. We do not want that. We do not run such a risk. »

Ms Merkel said "Vienna initiative", 2009 - when banks have agreed to maintain ready exposure in Central Europe - was "a good basis" for an agreement.

View of the German Chancellor has represented one will denounce climb-down Mr major of Berlin's position these days. Led by the Minister of Finance of the country, Wolfgang Schauble, Germany demanded bond should be forced to share the costs of bailing out the Greece, especially the banks that bought billions of euros of Greek debt.

€110Bn bailout last year of the Greece was very unpopular in Germany.

However, last week other European leaders aligned to warn that coercion would lead to a default on a large scale - and release a "lehman-like" shock to the financial system world.

Thursday, Jean-Claude Juncker, Chairman of the Group of Finance Ministers of the euro zone, said: "it's a really ugly situation." The idea [in German] is dangerous. It could cause more serious risk, all three rating agencies say they a credit event, and then there is a risk of contagion big for other countries. »

Mr. Greenspan made echo the feeling of yesterday, warning default full may leave some "against the wall", US banks. He added that the debt of the Greece crisis had the potential to push the US into a new recession.

Earlier this month following the Finance Ministers of the EU have been said to consider a plan in which the private creditors who have obligations to the Greek State would be called upon to cover between MDS € and BCV € fee. Vienna initiative was concluded between the banks and regulators in January 2009 to solve the "dilemma of the prisoner" threatening escalation of the financial crisis.

To protect against possible failures in rival banks, lenders had been taking funds massively. The problem was that while funds exposed to risk, private banks withdraw threatened a systemic full financial crisis which none would escape.

Ensure that the banks acted together and continued to fund, the European Bank for Reconstruction & Development obtained public commitments that banks would "maintain their exhibitions. The suggestion is that they must now travel on Greek debt.

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The Greek debt crisis: billion will be more pumped to bring relief to the Greece

The IMF said it was "ready to continue to support" for the country, providing that the Government has introduced far-reaching economic reforms. He threatened not to support the Greece, which was to be paid next month, but it is now thought unlikely.

A new package to bail out, the second in 13 months, should be accepted in the next few weeks.

The economic official of the European Union, an Olli Rehn, stated that wait for the EU and the IMF to release a loan of EUR 12 billion in early July to keep solvent Greece.

The Greece has been warned last night that it must introduce austerity cuts and not by default on repayments on its loan of emergency to bail out the as a condition of the new deal.

Fears that the Greece was failing to repay its debts has shaken financial markets yesterday.

At one point, the value of the FTSE 100 had decreased by 1.5 percentage points.

But after the IMF statement, shares began to recover. By the close of trading the FTSE had fallen by 0.76 percentage points to 5,699, a loss of over $ 10 billion to £. The euro fell against other currencies.

Yesterday evening, Greek Prime Minister George Papandreou, announced a cabinet reshuffle and said that he would be for a vote of confidence that he seeks to force by reducing expenditures and tax rises against widespread opposition.

An attempt to form a Government of national unity failed. The country has been marred by strikes and riots this week while several politicians have resigned in protest against the proposed austerity drive.

The Greece credit rating was cut to the lowest in the world and its debts is now considered less secure than those in poor developing countries. There were fears that, if the Greece by default on debt repayments, other countries such as the Ireland could be tempted to follow suit, leading to another financial crisis.

Herman Van Rompuy, President of the European Union, said yesterday evening that the euro would emerge stronger from the crisis.

Mr Rehn admitted that it would take more time to implement a second rescue plan for the Greece because of differences on how to

private investors share the burden.

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