Greek stocks and bonds rallied higher yesterday, in line with surging global markets, as investors welcomed news of a 750-billion-euro plan to contain the spreading debt crisis and boost the euro. Under the three-year plan adopted in Brussels early yesterday, countries in the 16-nation eurozone promised backing worth 440 billion euros for troubled governments. The International Monetary Fund would contribute an estimated additional 250 billion euros and the EU an additional 60 billion. Analysts said the deal buys time for governments to put their public finances in order but added that eurozone states now have to deliver or the plan could unravel dangerously, threatening an even worse crisis that could plunge the global economy back into recession. «The package shows policymakers are willing to do what it takes to restore confidence in the eurozone, and that helped peripheral bonds to gain ground,» Robin Marshall, director of fixed income at Smith & Williamson investment management in London, told Bloomberg. «The new measures will help to buy time and remove immediate risks of default in the region but it doesn’t solve the structural problem that Greece has.» Greek stocks soared 9.13 percent higher, with banks jumping 14.14 percent. The difference between yields on Greek 10-year bonds and their benchmark German equivalents was at 5.69 percentage points, down massively from a record 10.25 points on Friday. Borrowing costs for Spain and Portugal, two other eurozone countries seen as vulnerable to the sort of market pressure that has hobbled Greece, also eased yesterday. The sagging euro also gained strength. Separately, eurozone leaders on Saturday gave final approval for an 80-billion-euro rescue package of loans to Greece over the next three years to stave off default. The IMF also approved its part of the rescue package – 30 billion euros in loans – on Sunday. Prime Minister George Papandreou said that Greece will now have the time needed to push ahead with reforms, while Finance Minister Giorgos Papaconstantinou pointed out that the agreement will mean that Greece does not have any problems paying off creditors. «Over the next few days, payment will start of the first section of the loans from the European Union and the International Monetary Fund, so that the country has no problems whatsoever with its borrowing needs and servicing its debt this month, and for the months to come,» Papaconstantinou said in a statement. Meanwhile, ratings agency Moody’s said late yesterday that Greece may have its credit rating lowered to junk within the next month due to its «dismal» economic prospects. «We expect to conclude our review in the coming four weeks,» Moody’s, which currently has the nation’s A3 rating on review for a downgrade, said in a report today. «The migration will most likely be substantial, probably within the Baa range, but an adjustment to below investment grade is also possible.» Deficit cut over 40 percent in first 4 months Greece’s central government deficit narrowed by 41.8 percent in the first four months of 2010, the Finance Ministry said yesterday, signaling that the country is on track to meet this year’s fiscal targets. The central government deficit dipped to 6.283 billion euros from 10.791 billion in the same period last year, according to preliminary figures. The government has pledged to slash its budget deficit by 5.5 percentage points to 8.1 percent of gross domestic product this year, adopting tough austerity measures to qualify for a 110-billion-euro bailout by eurozone peers and the International Monetary Fund. Net revenues rose by 10 percent, partly helped by a value-added tax increase announced in March. Net spending before debt payments declined by 8.7 percent, more than the government’s 4.4 percent target. The figures do not contain local government and social security budgets, which are included in the deficit figures the country must submit to the European Union. The improvement in finances was also reflected in central bank data released separately yesterday, showing the government’s net borrowing requirement at 7.7 billion euros, 28 percent lower than for the same period last year.