Markets up in response to Spain's rescue deal

The European markets are up this morning (June 11th) in response to the good news that Spain's banking sector has been granted a rescue deal over the weekend.

On Saturday (June 9th), eurozone ministers agreed to lend the troubled Iberian nation up to €100 billion (£80 billion) to keep it afloat.

Prime minster Mariano Rajoy told reporters he is very pleased decision-makers chose to help Spain shore up its struggling banks, as it proves the 17-nation bloc values solidarity and demonstrates its strength.

"It was the credibility of the euro that won," he stated, adding that the cash injection will speed up the flow of credit in the form of much-needed loans for families, small to medium-sized enterprises and the self-employed.

However, he acknowledged that Spain is not out of the woods yet and remarked that 2012 would be a difficult one for the nation, which has entered its second recession in three years and has overall unemployment of nearly 25 per cent.

The US and the International Monetary Fund (IMF) have also welcomed the rescue fund.

IMF managing director Christine Lagarde said on Saturday that Spain needs a fiscal plan that gives "assurance that the financing needs of Spain's banking system will be fully met".

Economic affairs commissioner at the European Union Olli Rehn also noted that this deal will help reassure investors and stated the decisive action undertaken by the lenders shows the eurozone is prepared to step up to calm the markets and stem contagion.

At 08:35 BST, the Madrid IBEX rose 4.4 per cent - or 292.6 points - to an index value of 6844.4, while the Frankfurt Dax shot up 2.4 per cent - or 149.1 points - to 6279.9.

The FTSE 100 in London also reaped the benefits of a more stable Spain, advancing 1.8 per cent shortly after open to 5532.8 points.