Euro Jumps as Markets Welcome €750bn Rescue
THE TELEGRAPH: The euro soared on Monday morning as investors reacted with initial relief at the €750bn plan to defend the single currency and European Monetary Union from potential collapse.

After a frantic weekend of negotiations in Brussels, the Eurozone's 16 finance ministers released a package that pledges: €440bn in loans or guarantees from Eurozone countries, €60bn from the European Union's Budget and up to €250bn from the International Monetary Fund.

The EU's monetary affairs commissioner, Olli Rehn, said the agreement "proves that we shall defend the euro whatever it takes."

In a statement, the Finance Ministers said: "We are facing such exceptional circumstances today and the mechanism and the mechanism will stay in place as long as needed to safeguard financial stability," the ministers said in a statement.

The radical action, which will see the European Central Bank buy the debt of the most troubled countries, likely to include Portugal, Greece and Spain, comes as European Monetary Union faces the gravest threat in its short history. Fears that the debt crisis that has engulfed Greece would spread throughout southern Europe reached a crescendo last week. Investors welcomed the package. >>> | Monday, May 10, 2010

LE FIGARO: Euphorie sur les Bourses européennes : Le plan d'aide à la zone euro rassure les marchés. A Paris, le CAC 40 s'envole de près de 7%. Les bancaires grimpent sur des progressions à deux chiffres. >>> Par Marine Rabreau | Lundi 10 Mai 2010

THE TELEGRAPH: FTSE 100 soars as €750bn rescue package for Europe sparks global rally: The FTSE 100 joined in a stock market rally across Europe on Monday, as investors reacted with initial relief at the €750bn (£655bn) plan to defend the single currency from potential collapse. >>> | Monday, May 10, 2010

THE WALL STREET JOURNAL: European Markets Surge: European stocks and the euro surged Monday, as investors took heart from a €750 billion ($954.83 billion) rescue package intended to stabilize the single currency and prevent the Greek debt crisis from spreading to other member countries. >>> Michele Maatouk and Ishaq Siddiqi | Monday, May 10, 2010

Is Another Black Day on Wall Street on the Cards?
THE TELEGRAPH: The triggers for 1987's Black Monday – when Wall Street fell 22.6pc in a single day – are back, writes Ambrose Evans-Pritchard

Exactly 20 years after "Black Monday" – which saw Wall Street plunge 22.6pc – economists have warned of eerie parallels with the tensions visible on global markets today.

Simon Derrick, chief currency strategist at the Bank of New York Mellon, says the collapse of the US dollar in the mid-1980s lay behind the ructions that led to Black Monday – modern times' most dramatic one-day crash. The dollar had been sliding relentlessly for two years and was at risk of breaking down in a disorderly rout, much like today.

"The dollar was under severe pressure in October 1987. Interest rates were on the rise globally, the US trade deficit remained high and energy prices had been increasing on the back of tension in the Gulf," he said. These conditions are more or less in place once again.

The price of crude oil reached an all-time high of $84 a barrel last week on news of dwindling stockpiles, while US inflation has yet to subside. The producer price index surged in September –now up 4.4pc on last year.

The dollar has fallen below parity against the Canadian dollar for the first time since 1976. The global dollar index has dropped 9pc over the last year, touching an all-time lows of 77.66.

Jim Baker, the former US Treasury Secretary, said Black Monday's trigger was an interest rate rise by Germany's Bundesbank, forcing the whole European system to raise in lockstep.

The move sparked fears that the US Federal Reserve would have to match with tightening of its own, or risk a further dollar slide and the start of an inflationary spiral. The Fed found itself hemmed in by world forces.

Economists' concern this time is that Asian and Middle East central banks and investment funds are losing their taste for US investments. This could knock away a key prop for the dollar. There is already evidence that Korea, Singapore, Taiwan, Vietnam and Qatar are drawing back. Europe is less likely to prove a trigger today. Even so, European Central Bank governors recently warned that inflation risks are rising, hinting at another rate rise. Is another Wall St crash coming? (more)

Mark Alexander