Global markets buoyed by Europe hopes

Markets rallied further on Monday on hopes that Europe's leaders will agree on a plan to restore long-term confidence in the euro, saving it from collapse and averting global economic chaos.

German Chancellor Angela Merkel and French President Nicolas Sarkozy appeared to have made headway in a meeting in Paris Monday. In a joint news conference, the two said they were looking to enshrine new euro rules in a new treaty, including sanctions against countries that have higher than prescribed budget deficits.

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Their proposals will be sent to the other EU leaders ahead of a summit in Brussels on Friday.

For a week now, the markets have been hopeful that, given the gravity of the situation afflicting the eurozone, Europe will come up with a common proposal for tighter integration on budget matters. Analysts say that such a plan could lead to further emergency aid from the European Central Bank, possibly through the International Monetary Fund.

In Europe, the FTSE 100 index of leading British shares was up 0.4 per cent at 5,577, while Germany's DAX rose 0.7 per cent to 6,121. The CAC-40 in France was 1.2 per cent higher at 3,203.

The biggest gainer was Italy's FTSE MIB, which was trading up 3.1 percent, a day after the government led by Premier Mario Monti agreed to big austerity and growth-boosting measures. The proposals are being presented to a skeptical Parliament.
On Wall Street, the Dow was up over 1 per cent.