Euro fights back amid Greek crisis

THE euro and European share prices fought back yesterday just before Greece secured a deal to extend its financial rescue package amid signs of recovery in the eurozone economy.

The single currency strengthened against the pound and recouped earlier losses against the US dollar. Last night the Greek government's request for an extended loan was accepted by eurozone finance ministers.

Its existing deal expires at the end of this month and Greece could have run out of money without a new agreement.

Germany is still calling for "significant improvements" in Greece's reform commitments.

Yet Greece was determined to see austerity measures relaxed to revive its economy. The key meeting came as evidence emerged that the economy of the eurozone, Britain's biggest trading partner, is turning the corner.

The promise of an £800billionplus stimulus package by the European Central Bank to be launched next month spurred the region's private sector to grow at its fastest pace in seven months.

The economy is on course to grow by at least 0.3 per cent in the first quarter

Chris Williamson, Markit chief economist

February's purchasing managers' index, compiled by Markit, climbed to 53.5 from 52.6 the previous month, well above the 50 figure denoting expansion, with manufacturing and services sectors both seeing faster growth.

Last month the ECB's president Mario Draghi announced at least 1.1trillion euros would be injected into the faltering eurozone economy through quantitative easing, a bond-buying programme that encourages borrowing and spending.

Growth of business activity has accelerated for three months in a row, with the PMI data showing new orders growing at their sharpest rate for seven months. Firms took on extra staff to work through backlogs of work at the fastest rate since August 2011.

Expectations of business activity in the year ahead in the service sector rose to the highest level since May 2011.

Markit chief economist Chris Williamson said: "Undeterred by the ongoing Greek debt crisis, economic growth is gathering momentum and looks set to gain further traction. The economy is on course to grow by at least 0.3 per cent in the first quarter."

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