European finance ministers have agreed a new bailout mechanism, aimed at restoring financial stability in Europe, which could amount to €750bn.
The plan is designed to restore confidence in the single currency and provide support to vulnerable eurozone countries, such as Portugal and Spain, should they encounter difficulties servicing their debt.
EU Commission President Jose Manuel Barroso said the eurozone was regaining investors' confidence following the decision to create the emergency fund to fend off the debt crisis.
'The eurozone is certainly regaining confidence. Our fundamentals are certainly good,' Mr Barroso said on the sidelines of an economic conference in Brussels.
Markets around the world responded positively to the overnight deal. Many European markets posted record single-day gains, including Spain, Portugal and Italy.
The euro too rose very sharply early today, but by late afternoon the unit was slipping back as investors took profits.
The Spanish presidency of the European Union said the deal should stabilise the single currency and stave off speculative attacks.
The package has pledged €500bn of loans and loan guarantees to any eurozone countries needing funds, plus about €250bn from the International Monetary Fund.
Officials stressed that the fund would come with strict conditionality and the same kind of IMF involvement as the €110bn bailout for Greece, which was agreed last week.
Minister for Finance Brian Lenihan said it was a credible plan, which should restore confidence in the euro.
Mr Lenihan said: 'Member states are showing their resolve to support the overall European economy and the interests of all European citizens.'
German Chancellor Angela Merkel said the package would serve to 'strengthen and protect' the euro.
Elsewhere, the European Central Bank has said it will buy eurozone government and private debt, abandoning resistance to full-scale bond purchases in light of Greece's debt crisis.
The ECB said the scope of the purchases was yet to be determined, but they would be offset by liquidity-absorbing operations so as to not affect the stance of monetary policy.
