Europe’s big spenders on the backfoot after trillion dollar rescue

BRUSSELS, May 10, 2010 (AFP) – Europe and the IMF gave a major boost to world markets Monday with a trillion-dollar war chest to ease fears of a new recession, but governments faced pressure to clean up their fiscal houses. Some 440 billion euros would come from eurozone nations and 60 billion euros from the commission. Another 250 billion euros would come from the IMF.

Many European markets posted record single-day gains, among them Spain, Portugal and Italy which were pummeled last week amid concerns these countries could fall by the debt wayside like Greece.

Wall Street rebounded strongly with the blue-chip Dow index closing up 404.71 points or nearly four percent, following a turbulent week for Wall Street that saw the index plummet almost 1,000 points briefly on Thursday.

The euro too rose very sharply early Monday but by late afternoon the unit was slipping back as players took profits and waited to see if the eurozone nations would really stick by the currency’s fiscal rules this time around.

Meanwhile, money market rates — the interest paid by those seeking to raise fresh funds — fell sharply, with Greek 10-year bond yields halving from peak levels around 12 percent prior to its own, 110-billion