European stock markets began to rally on Friday afternoon after a choppy morning, ending strongly as hopes rose of a fiscal pact amongst eurozone leaders.
At the close the French CAC-40 and the German DAX were up 2.48% and 1.91%, respectively. The UK's FTSE-100 rose by 0.83%.
The morning's headlines were mostly fixated on the UK's decision to veto treaty change, but a deal amongst the 17 members of the single currency to address some of the core concerns of the eurozone remains on the table.
By 9.15 GMT, the FTSE 100 remained flat, but in France the CAC-40 rose 0.66%. The German DAX rose marginally, up 0.13%. With a lot of uncertainty over the specifics of the deal, and over the size and scope of the bailout mechanisms, trading was volatile and within half an hour, the DAX had turned negative and the CAC-40 flat.
However, the markets turned strongly by early afternoon. Just after midday the DAX was 1.51% up and the CAC 1.69% up, despite an announcement that the rating agency Standard & Poor's to downgrade three French banks, a move which on most other days would have dampened confidence.
Thursday saw a major reverse after the president of the European Central Bank (ECB), Mario Draghi, indicated that institution would not be imminently expanding its programme of buying the sovereign debt of struggling eurozone countries.
Markets have been waiting for a sign that the "bazooka" of the ECB will be deployed. This would see the institution commit to printing money to buy up sovereign debt and recapitalise banks in the eurozone, creating a safety net that would stop the cost of borrowing from rising too high.
"The ECB through sleight of hand will go down the route of quantitative easing, just as America and the UK have done," David Kuo, at investment analysts the Motley Fool, said ahead of the summit. "They will create money, but instead of creating money and putting it into the stability fund, they will use that money instead and lend it to the IMF, and then the IMF will lend that money back to the stability facilities.
"It buys some time, and over the medium term they will be able to inflate away that debt, provided that Germany can control the budget of these countries and tell public sector workers that they aren't going to get a pay rise. It's austerity through the back door and quantitative easing through the back door, so it's all smoke and mirrors."
"The way I read it is that as long as there is some kind of agreement in moving towards treaty change then Draghi will produce sufficient amount of money to, presumably indirectly via the IMF, provide support for Italy and possibly Spain, should it be required," Simon Derrick, chief currency strategist at BNY Mellon said ahead of the summit.
"One of the main concerns is that historically Germany has resisted that, so that is potentially a stumbling block along the way. If it is, we go back to immediate crisis mode."