Stocks, U.S. Futures, Euro Gain on Reports of European Plan on Debt Crisis

The euro, European stocks and U.S. index futures rallied, erasing earlier losses, amid reports that European Union officials have come up with a plan to recapitalize struggling banks and halt a surge in bond yields.

The euro strengthened 0.5 percent to $1.4284 at 8:44 a.m. in New York after slumping as much as 0.5 percent earlier. The Stoxx Europe 600 Index increased 0.5 percent and futures on the Standard & Poor’s 500 Index advanced 0.6 percent. U.S. Treasuries fell, while Italian, Spanish and Greek bonds surged.

The euro and equities erased earlier losses as Reuters reported that a draft EU document called for a Greek “Marshall Plan” that includes an extension of bailout funds to Greece and the possible purchase of bonds in secondary markets to halt a surge in yields that has raised borrowing costs for the most- indebted nations.

Earlier, Luxembourg Prime Minister Jean-Claude Juncker said Greece may be unable to avoid default. Any euro-area agreement on a second aid package for Greece might include a selective default on the nation’s debt, though other options would be preferable, Juncker said today as officials gather in Brussels to try to resolve the region’s debt crisis.

To contact the editor responsible for this story: Michael Regan at mregan12@bloomberg.net