The euro rebounded against the dollar and equity markets around the globe surged to record highs on Friday after eurozone finance ministers agreed in principle to extend heavily indebted Greece’s financial rescue by four months. As talks for a deal progressed, Germany’s DAX index hit a record intra-day high and Britain’s FTSE share index closed within 0.5 per cent of a 15-year high before the accord was announced.

The euro rebounded and the benchmark 10-year US Treasury note retreated. Europe’s leading equities index FTEU3 closed at seven-year highs in anticipation a deal would be reached.

The Greek accord will allow investors to concentrate on the fundamentals that should be driving the market, said Ben Pace, chief investment office at HPM Partners in New York. “You’re seeing better US economic statistics than over the past three or four weeks. The European statistics have gotten a lot better too,” Pace said.

Surveys indicated on Friday that the eurozone’s private sector expanded in February at its fastest pace in seven months, though companies continued to cut prices, suggesting low inflation remains a challenge for policymakers.

The Dow Jones industrial average closed up 154.67 points, or 0.86 per cent, to 18,140.44. The S&P 500 gained 12.85 points, or 0.61 per cent, to 2,110.3 and the Nasdaq Composite added 31.27 points, or 0.63 per cent, to 4,955.97. The Nasdaq matched an eight-session winning streak from a year ago and inched closer to its March 2000 all-time high reached during the dot-com bubble.

For the week, the Dow rose 0.7 per cent, the S&P 500 gained 0.6 per cent and the Nasdaq rose 1.3 per cent.

The Greek stalemate overshadowed data pointing to growth in Germany and France. Markit’s Composite Flash Purchasing Managers’ Index rose to its highest since July, beating the highest forecast in a Reuters poll of economists.

Halfway into the European earnings season, results have been strong. Fourth-quarter earnings are expected to grow 19.5 per cent, which would be the best quarter in three and a half years.

The FTSEurofirst 300 is up 11.4 per cent so far this year, outpacing a 2.6 per cent gain in the S&P 500. The European Central Bank’s plans to buy government bonds to boost the economy has helped the rally.

Brent crude oil steadied above $60 a barrel as news of a falling US rig count outweighed concerns about oversupply. Brent crude futures for April settled up 1 cent at $60.22 a barrel.

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