The markets recouped Monday's losses following a reasonably well-received Spanish debt auction yesterday.

Bloomberg

European officials attempting to fend off the euro area’s first sovereign default will try to settle remaining disputes today as they close in on a 130 billion-euro ($170 billion) Greek bailout. Finance ministers meet in Brussels at 3:30 p.m., joining Greece’s prime minister, Lucas Papademos, who arrived on the eve of the gathering. Their talks on his country’s second bailout in two years will aim to reconcile demands made on Greek leaders, a debt swap among private creditors, the role of the European Central Bank and concerns the measures won’t bear fruit.

Investors welcomed a European deal yesterday sending global equities soaring. Nonetheless, if markets are to sustain gains made on Thursday, leaders will have to provide further details over the coming days to underpin this process, specifically clarification on how exactly the bailout fund will be leveraged, as well as detailed information on 50% Greek bond haircuts and the implications for the region's banks.

Rising Spanish bond yields ensured markets started the week on cautious ground, yields for their 10 year government debt rose above 6%, the level widely regarded as unsustainable. The Euro also declined to a two month low versus the dollar of $1.30 during the day on concerns of the regions periphery. The increasing unease over the Eurozone may consequently see the European Central bank recommence its bond purchases within its Securities Markets Programme which has been halted for five weeks.

BBC
Greek MPs have approved a controversial package of austerity measures, demanded by the eurozone and IMF in return for a 130bn euro ($170bn; £110bn) bailout. The vote was carried by 199 in favour to 74 against. Coalition parties expelled more than 40 deputies for failing to back the bill. Tens of thousands protested in Athens, where there were widespread clashes and buildings were set on fire. Violent protests were reported in cities across the country.

European leaders gathered in Brussels last night in the hope of concluding their three pillared approach to tackling sovereign crisis. Key announcements included that the banks within the region must now raise their tier one capital ratio to a minimum of 9%. The European Banking Authority stated that €106 billion of fresh capital would be required to be raised before June 2012 for European banks to comply with higher capital adequacy requirements. Furthermore, despite some resistance, a deal was struck with Greek debt holders in the early hours leading to private investors taking a 50% hair cup in the face value of their Greek bonds. Moreover, French and German differences over the European Financial Stability Facility were put to one side when an agreement to leverage the bailout fund from €440 billion to over €1 trillion was made to boost their firepower and remove contagion fears. European leaders are now required to convince cash rich emerging nations including China and Brazil to commit investment into the specially created fund.