AlQa'dah 29, 1432, Oct 27, 2011, SPA -- European shares surged to a 12-week high in early trade on Thursday after euro zone leaders agreed to boost the region's rescue fund to 1 trillion euros and struck a deal with private lenders to accept a 50 percent cut on their Greek bonds, according to Reuters. The private sector agreed to voluntarily accept a cut in its bond investments to reduce Greece's debt burden by 100 billion euros, while around 250 billion euros of the European Financial Stability Facility (EFSF) will be leveraged 4 to 5 times to produce a headline figure of around 1 trillion. "Even though details are not yet in place, the extension of the EFSF will build a firewall between Greece and the rest. With the agreement on a 50 percent haircut for Greece, quite a bit of uncertainty has been taken off the table as well," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels. "It was very important to convince the market that this is a good plan. The restoration of confidence is an important step in the healing process. However, we will see whether the recovery in risky assets has legs." At 0706 GMT, the FTSEurofirst 300 index of top European shares was up 2.6 percent at 1,009.45 points, the highest since early August. The European banking sector , which has been hit hard by its large exposure to peripheral euro zone countries, spiked 4.5 percent to top the gainers' list, following the agreement, which will be accompanied by a recapitalisation of the European banking sector by around 106 billion euros.
