LONDON – Financial markets climbed away from a potential abyss on Monday after the European Union and International Monetary Fund (IMF) agreed a bumper rescue package to prevent a sovereign debt crisis spreading. World stocks rose nearly 3 per cent, the euro gained 2 per cent on the dollar and corporate and peripheral debt yields narrowed sharply against benchmarks. "Euro zone policymakers surprised probably even the most optimistic observers by presenting a quick and forceful, unprecedented crisis package," ING said in a note. "It does not solve the fundamental fiscal problems but it gives countries now several years." The package agreed earlier on Monday pledged 500 billion euros ($670 billion) of loans and loan guarantees to any euro zone countries needing funds, plus about 250 billion euros from the IMF. It was a package on the scale of the $700 billion Troubled Asset Relief Programme (TARP) launched by the US to fend off the financial crisis of 2007/09. There were also measures by central banks to address funding strains and a European Central Bank plan to buy the region's government bonds. A number of European central banks said they had already started. The moves followed sharp sell offs in riskier assets across the world last week prompted by fears that Greece's struggle to avoid default on its debt would spread to other euro zone economies and potentially elsewhere. Global stocks as measured by MSCI were up 2.7 per cent with its emerging market-only counterpart jumping more than 3 per cent. The pan-European leapt more than six per cent, easily recouping Friday's losses. It lost more than eight per cent last week as the debt crisis bubbled. "The EU has taken a decisive action to stamp out the speculative attack against the euro and this should be sufficient to bring some calm into the market," said Klaus Wiener, the head of research at Generali Investments. "What has been done is sensible. It has sent a very strong message to the market that the euro will not be allowed to fail."