Investors around the world cheered a German court ruling that clears the way for Europe's latest rescue fund.
European stocks rallied, the euro climbed higher, and borrowing costs in Spain and Italy eased to their lowest levels in six months.
Early Wednesday, the German Constitutional Court ruled against a group of conservative politicians who requested an injunction that would bar Germany from ratifying the treaty governing the European Stability Mechanism.
The DAX in Frankfurt surged almost 2%, while the CAC 40 in Paris jumped 1%. London's FTSE closed down 0.2%.
Wall Street also got a lift from Europe, with all three major U.S. indexes rising 0.2%.
"I think it's very much a political symbol for support of these bailout policies," said Clemens Fuest, professor of taxation at Oxford University's Saïd Business School. "That's bad news for the taxpayer, but good news for people who hold government bonds. I think the uncertainly about short-term exits [from the European Union] of Greece and other countries like Spain has been reduced."
The decision helped push down Spanish 10-year bond yields to 5.6%, while the yield on the Italian 10-year bond slid to 5.06%. Borrowing costs for both nations haven't been this low in months as Spain and Italy have struggled to reduce their deficits.
Last week's move by the European Central Bank to buy euro-area bonds helped ease investors' concerns. And the latest news from Germany is adding to that optimism. The euro is at a four-month high against the U.S. dollar, just shy of $1.30.
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German magazine Der Spiegel referred to the German court ruling as "a sigh of relief" for Germany and Europe, and "a historically significant signal for the euro rescue." German Chancellor Angela Merkel echoed the sentiment, calling it "a good day for Europe."
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Asian markets, which were already closed ahead of the German ruling, ended higher. Tokyo's Nikkei gained 1.7%, while the Hang Seng in Hong Kong was up 0.9%, and the Shanghai Composite added 0.3%.
