Markets around the world rallied after European leaders agreed Thursday to a plan to deal with Greece's massive debt troubles.
The Canadian dollar rose above parity with the U.S. dollar for the first time since Sept. 20, closing the day at 100.88 cents US.
The S&P/TSX composite index rose 279.38 points to 12,465.44 after news of the deal, also helped by strong earnings from the resource sector.
On Wall Street, the Dow Jones industrials rose 339.44 points to 12,208.48.
The last-minute deal on European debt pulled Greece from the brink of bankruptcy and possibly prevented another global recession.
There were three main decisions to come out of the 10-hour session, which comes after weeks of pressure from the international community for European leaders to come up with decisive plan.
- European banks agreed to slash Greek debt and take a loss of 50 per cent on investments they made in Greek government bonds.
- European banks will be recapitalized to the tune of 106 billion euros -- mostly to help the banks sustain their Greek losses.
- The enlargement of Europe's bailout fund to the equivalent of US$1.4 trillion to serve as a firewall to prevent large European economies from being dragged into the debt crisis.
BNN's Michael Kane said news of the long-awaited plan caused overseas markets to jump in the range of 2 to 4 per cent as investor confidence began to return.
He said the announcement Thursday likely saved Greece from even deeper economic turmoil.
"Luxembourg Prime Minister Jean-Claude Juncker, who also holds rank in the government of the Eurozone, told reporters had a deal not been reached they would have moved immediately to push Greece into bankruptcy, so they were right on the brink," Kane said.
World stock markets surged higher Thursday on the news. Oil prices rose above US$92 per barrel while the euro gained strongly -- a signal investors were relieved at the outcome of the contentious negotiations.
In France the three leading banks' shares rose between 10 and 15 per cent on news of the deal.
"We have reached an agreement, which I believe lets us give a credible and ambitious and overall response to the Greek crisis," French President Nicolas Sarkozy told reporters.
"Because of the complexity of the issues at stake, it took us a full night. But the results will be a source of huge relief worldwide."
Prime Minister Stephen Harper, Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney have all expressed frustration in recent weeks with the inability of the 17 members of the EU to come up with an agreement in recent months.
Many analysts had predicted that a Greek default would trigger a Europe-wide recession that would quickly envelope nations outside of the continent.
Harper, in Australia for meetings with other leaders of Commonwealth countries, cautiously welcomed news of the deal.
According to reports, EU leaders had the most difficulty coming up with a strategy for dealing with Greece, eventually pledging to reduce the nation's debts to 120 per cent of its GDP by 2020. Those debts had been on track to hit 180 per cent unless action was taken.
In order to hit that target, banks are being asked to take a 50 per cent loss on their Greek bonds, which equals about euro100 billion or US$139 billion.
Meanwhile, the eurozone said it would pledge 30 billion euros to guarantee the remaining value of those Greek bonds.
The details of the plan -- which could guarantee its success or failure -- are expected to be finalized by early December, with investors set to trade their bonds in January.
"We can claim that a new day has come for Greece, and not only for Greece but also for Europe," said Greek Prime Minister George Papandreou, whose country's troubles touched off the crisis two years ago. "Let's hope the worst is over."
