Financial Regulatory Forum

By Marcin Grajewski and Jan Strupczewski

BRUSSELS, Feb 11 (Reuters) – European leaders have reached a deal to provide aid to Greece, EU president Herman Van Rompuy said on Thursday, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro.

“There is an agreement on the Greek situation. We will communicate now the agreement to the other leaders,” van Rompuy told reporters gathered at an EU leaders’ summit.

The agreement was forged in talks between Van Rompuy, European Commission President Jose Manuel Barroso, French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and Greek Prime Minister George Papandreou.

Polish Prime Minister Donald Tusk told reporters earlier that the aid, which would amount to the first bailout of a euro zone members since the currency was created 11 years ago, was likely to come in the form of loans.

“It could be voluntary loans from member states. That seems to be the best option,” Tusk said.

By Andrei Khalip

LISBON, Feb 5 (Reuters) – European policymakers scrambled on Friday to reassure markets about the stability of the 16-nation currency bloc as investors shed euro assets for a second day and Portugal backed a law that may push its swollen deficit higher.

European Central Bank Governing Council member Ewald Nowotny tried to play down a sharp fall in the euro, which hit its lowest level against the dollar since May 2009, and called talk of a euro zone breakup “absurd”.

Greek Prime Minister George Papandreou, on a visit to India, promised to “credibly apply” an austerity programme designed to bring his country’s yawning debt and deficit under control.