Oct. 27 - Asian shares rally after EU leaders agree on a euro zone rescue package, saying private holders of Greek debt would accept a 50 percent writedown on their holdings. Toshi Maeda reports.
Asian shares rallied, and the euro jumped to its highest in seven weeks Thursday (October 27), after EU leaders agreed to cut Greece's debt by half and boost the region's rescue fund. After a marathon summit in Brussels, European leaders say private holders of Greek debt would accept a 50 percent writedown on their holdings. Policymakers also agreed to increase the firepower of the euro zone bailout fund to about one trillion euros, and force banks to raise their capital buffers. German Chancellor Angela Merkel says the whole world is watching to see how Europe takes responsibility for its problems. (SOUNDBITE) (German) GERMAN CHANCELLOR ANGELA MERKEL SAYING: "I am aware, and everybody was aware that the whole world was looking at this meeting. That we can show the world how we can guard ourselves from this deep economic crisis. And I think that tonight we Europeans have taken the right measures." EU Council President Herman Van Rompuy adds the measures agreed should be sufficient to safeguard the euro from future crises. (SOUNDBITE)(English) EUROPEAN COUNCIL PRESIDENT HERMAN VAN ROMPUY SAYING: "A sufficient firewall against contagion. Thanks to an agreement to multiply to up five-fold the firepower of the EFSF rescue fund. The leverage could be around one trillion under certain assumptions about market conditions and investors' responsiveness in view of economic policies." MSCI's index of Asia Pacific shares outside Japan was up 2.5 percent to its highest level since early September. Japan's Nikkei index also rose one and a half percent despite the yen's rise to a fresh record high against the dollar the previous day. European policymakers also agreed to force banks to raise their capital buffers to 9 percent in core Tier 1 capital, while welcoming Italy's plans to increase the pension age to 67. Toshi Maeda, Reuters.