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Angela Merkel softened hard line on fiscal discipline and debt repayment to hand Mariano Rajoy summit triumph
By Ian Traynor in Brussels and Phillip Inman, guardian.co.uk, Friday 29 June 2012
European leaders have moved to halt the crisis engulfing Spain and Italy by agreeing a radical bailout package for the single currency's teetering banks.
Amid deep divisions over the debt and currency crisis, and under immense pressure to come up with credible moves, Angela Merkel, the German chancellor, softened her hard line on fiscal discipline and debt repayment to hand Mariano Rajoy, the Spanish prime minister, a summit triumph.
Leaders agreed to set up a supervisory system for eurozone banks that will form the first step towards full banking union, scrapped the requirement that governments get preferential status over private investors in the event of a default and eased the stiff terms for future bailouts.
Markets surged after the deal was agreed, giving European leaders the respite they have been seeking for several months. The German and French stock markets jumped more than 4% while the main market in New York soared in early trading as renewed confidence among investors erased several weeks of losses.
In Madrid and Rome, the deal was hailed as a victory over the all-important bond markets [...]