Euro at four month high after German bailout ruling

Germany’s Constitutional Court gave a green light yesterday for the country to ratify Europe’s new bailout fund, boosting hopes that the single currency bloc is finally putting in place the tools to resolve its three-year old debt crisis.

In an eagerly anticipated ruling that has had investors on tenterhooks for months, the court in the southern city of Karlsruhe insisted the German parliament be given veto rights over any increase in Berlin’s contribution to the €700 billion European Stability Mechanism (ESM).

But the strings it attached to its endorsement of the ESM and a separate European pact on budget rules were less onerous than many had feared. The euro shot up to a four-month high against the dollar and global stocks rose to a five-month peak.