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European Markets

European markets are called to open higher this morning.

European Union leaders pledged to stabilize the euro-area economy, vowing to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week.

“This is not only a green light but also a positive sign for the future of Greece,” Papandreou told reporters after the first session of an EU summit in Brussels late yesterday.

Greece’s next hurdle is to shepherd 78 billion euros ($111 billion) of austerity measures through parliament, after yesterday’s endorsement of the program by experts from the European Commission, European Central Bank and International Monetary Fund.

Asian Markets

Asian stocks rallied, driving the region’s benchmark index to its first weekly advance in eight, and Treasuries dropped as European leaders voiced support for Greece and a slump in energy prices eased concern the global recovery will falter. Oil rose, leading a rebound in commodities.

The MSCI Asia Pacific Index jumped 1.2 percent at 3 p.m. in Tokyo, while the Shanghai Composite Index surged 2.5 percent. Futures on the Standard & Poor’s 500 Index added 0.5 percent and those on the Euro Stoxx 50 Index increased 1.7 percent. Ten-year Treasury yields added three basis points. The Dollar Index rose for a third day, while the euro was little changed as it headed for a third weekly drop. Oil recouped some of yesterday’s 4.6 percent plunge in New York. Copper and corn also climbed.

US Markets

After tanking earlier in the session, U.S. stocks recovered nearly all their losses in the last hour of trading Thursday, when reports said Greece had reached an agreement on austerity measures with the European Union and the IMF.

“The news was perceived as very positive and without confirming anything, the market rallied 100 points on the news,” said Jason Weisberg, senior vice president at Seaport Securities.

Citing unnamed sources, Reuters reported that Greece agreed to a new five-year austerity plan with new tax hikes and spending cuts. That news immediately calmed some jitters about Europe’ debt crisis, and helped U.S. stocks regain some lost ground.

At the closing bell, the Dow Jones industrial average was down only 59 points, or 0.5%, compared to much steeper losses of as much as 234 points earlier in the session.

The S&P 500 lost 3 points, or 0.3%. The Nasdaq Composite added 17 points, or 0.7%.

Events this week

Friday – The Commerce Department will release its third reading on first-quarter gross domestic product at 8:30 a.m. ET, as well as May durable goods orders.

First quarter GDP is expected to remain steady at 1.8% growth according to economists’ estimates. Durable goods orders are expected to rise 1% compared with April’ 3.6% decline in orders.