Markets have responded powerfully with sharp moves in equities, bonds and currencies after EU leaders agreed measures that will see a shift towards central supervision of eurozone banks in exchange for short-term support on Italian and Spanish sovereign debt. 12.19: In this video, the FT's investment editor James Mackintosh looks at the summit conclusions, and explains why they do not offer a complete solution to the crisis. 12.05: Update from Hugh Carnegy, our Paris bureau chief: As the assembled French media waited for President Hollande to give his press conference, political reaction to the deal in Brussels was emerging in Paris. Bruno le Roux, the new socialist president of the national assembly, hailed it as a turning point. That's significant mainly because Le Roux will have the job of cheering the whole package through the assembly - including the fiscal discipline pact that has remained untouched despite Hollande's election promise to renegotiate it. "On the initiative of François Hollande the growth pact is in the process of replacing the policy of austerity," he said. Well, not quite. But that is the line Hollande will rely on to persuade his anti- austerity socialist rank and file. Alain Juppé, foreign minister under Nicolas Sarkozy, was more circumspect. He called the deal "a small step forward" but said Angela Merkel had given no ground to Hollande's demands to mutualise eurozone debt. He dismissed the growth pact as having been "long in the pipeline." 12.10: And for the bond markets, we refer you to Mary Watkins, FT specialist, who tweets as follows: Yields on Spanish 10-year bonds are trading down 34 basis points at 6.61 per cent. Comparable Italian yields are down 25bp at 5.94 per cent 12.07: Stock markets still showing a lot of green on the screen at noon. The Euro Stoxx was up 2.89%, with FTSE 100 least excited up at 1.41%, CAC 40 at 2.79%, DAX up 2.49%, and Spanish and Italian markets predictably most keen on the news out of Brussels, with the IBEX up 2.96% and Milan's FTSE MIB up 3.2%. 11.59: More doubts about the eurozone summit deal expressed by analysts, this time Nicholas Spiro of Spiro Sovereign Strategy: The bottom line as far as we're concerned is that, on closer inspection, this morning's agreement is woefully insufficient to restore confidence, particularly in Italy which is once again becoming the focal point for market anxiety. There's too much implementation risk on the legal and political fronts that could delay moves towards a banking union. Most importantly, interim measures to shore up Italian and Spanish debt markets in the absence of a fiscal union are not credible in the eyes of investors. Spanish 2-year yields have already risen 30 basis points from their low this morning while their Italian equivalents have increased by 25 basis points. 11.50: [Off topic - note use of square brackets, but a fabulous A-List comment on Obamacare has just dropped on ft.com from Robert Reich, former Clinton cabinet member] 11.44: Humans being a competitive species, the normal response to an overnight session of deeply complex fiscal negotiations normally prompts the question next day: Who won? According to Simone Foxman at Business Insider, it was: Not Germany. ..." it would appear that Germany has to blink if it wants to save the euro project, and it certainly has here in agreeing to new policies that put public funding at risk." 11.34: This blog is not interested in cheap tricks to bolster reader interaction, but there is surely room for a quick caption competition? Mrs M: "The first goal was clearly offside and so we're docking you a "clarity on debt seniority status" concession. Mr M: "But you forget, Chancellor, I am a technocrat and therefore do not even like football." 11.29: At the risk of causing further disturbances in the ether, our colleagues in the small, but lively town of Alphaville are reading the runes of Brussels too. 11.26: [Of course, live blogging a live blog may cause some kind of space-time paradox, in which case, we apologise for bringing about the end of everything.] 11.24: In other live blog news, our colleagues in the economics department are following the financial stability press conference and Claire Jones has just reported this: 11.17 This is interesting. Both Sir Mervyn and Lord Turner would welcome the European Central Bank becoming the eurozone's banking supervisor. "I personally would welcome having as an opppostive number the European Central Bank," the governor says. "Having one overall supervisory authority that didn't feel it had a strong political commitment to banks, but instead the stability of the financial system as a whole, might be better from our point of view. Personally I would find that a bit of a relief. However, he then notes gloomily that a single banking supervisor isn't germane to the main problems the eurozone is facing. Lord Turner then breaks ranks with the governor (see 10.48) over keeping quiet about the eurozone summit and says that last night's statement is a move in the right direction."The possibility of recapitalising banks directly is a step forward," he says, adding that "the words as written look like a major step forward" in recognising the reality of monetary union. Lord Turner is "very supportive" that the eurozone's supervisor should be the ECB. 11.17: The Irish PM, or Taoiseach, Enda Kenny, is claiming a good result from last night's long session. "The fundamental principle of the ESM providing the funding to break the link between the sovereign and the bank has now been established," Bloomberg reports Kenny as saying after the summit. Kenny said the burden on Irish taxpayers may be eased by the accord as what seemed "unachievable has now become a reality." 11.10: No matter what eurozone leaders say and think, the markets numbers aren't going their way: 10.57: Quick update from Hugh Carnegy, the FT's Paris bureau chief who is in Brussels for the summit. He tells us that today's summit lunch has been cancelled [perhaps everyone needs a nap after last night's 4.30am talks?] and the French president, François Hollande, is due to give his final press conference shortly. 10.55: "Merkozy divorce did shake the EU family" - that's how Kasper Kirkegaard, an analyst at Danske Bank, sums up the outcome of last night's discussions. 10.45: Italy's 10 year bond yields are back over 6 per cent. 10.31: David Miliband, the Labour MP and former foreign secretary, has welcomed the outcome of last night's discussions: 10.26: Newsnight's economics editor Paul Mason has shared his first impressions of the summit conclusions on his tumblr blog. From which: Last night the EU leaders took steps which, though not a complete solution to the crisis, averted its escalation. Crucially Angela Merkel did what she had insisted was impossible: she made major concessions on short-term measures to ease the crisis without achieving the long-term quid-pro-quo German politics had dictated she must demand. 10.24: Herman Van Rompuy, president of the European Council, is keen to remind us that the summit is not finished yet: 10.16: The FT's James Wilson in Frankfurt reports on some ECB data out today, that illustrates the pain being felt by many businesses across the single currency region: Lending by banks to eurozone companies declined last month, showing the economic fragility across much of the region and adding to the likelihood that the European Central Bank will consider cutting interest rates next week. As markets reacted positively to eurozone leaders" agreement in Brussels to support Spanish banks and make other concessions to peripheral countries, ECB data on Friday showed that the annual growth rate of loans to the private sector turned negative in May for the first time in more than two years. Full story on FT.com soon. 10.10: If you want to read the official statement issued after last night's summitry, it's available here. The first line is pretty strong, getting to the heart of the problem that has dogged the eurozone in recent weeks: We affirm that it is imperative to break the vicious circle between banks and sovereigns. And here's the wording on the Irish question (see 08.58 post): 09.48: This is not exactly eurozone, but given that the misbehaviour of bankers set us on the path to this summit, we think it is germane to point you to Gillian Tett's column today where she points out that while the Libor shenanigans were going on, not everyone was ignoring them. 09.42: Alice Ross has some more reaction from forex analysts: Here is a round-up of foreign exchange analyst reaction to the summit effect on the euro. Pretty bearish overall. JPMorgan: "All the unfinished business around delivering banking and fiscal union suggest EUR/USD continues to move erratically in the 1.20s over the next few months rather than trends higher." Morgan Stanley: "The statement is indeed a step in the right direction, but it does not address fiscal integration and creates only the possibility of a circuit breaker between the banks and the sovereign. As markets realize that the statement is not a meaningful step forward, we expect the euro and high-beta currencies to see pressure. Marex Spectron: "The Euro rallied on the back of good news from the EU summit. We would like to see more details and comments from Angela Merkel. Selling EURUSD at these levels would be a good option. It would not be surprising if comments come out stating that we are not out of the woods just yet causing EURUSD to retrace from 1.2600 to 1.2450. There is a lot of positivity for a Friday and any piece of negative news will now have a bigger move than it would have had yesterday. Soc Gen: "What does this mean for the euro? It's another "fix" rather than the move closer to debt mutualisation, which I think is required for a sustained euro rally. A credible plan to reverse the economic downtrend is needed too. So no change to a view that EUR/USD will fall to below $1.20 over the next twelve months. No change either to the view this will be a very gradual and choppy fall. 09.39: First up is reaction from the currency markets, with the FT's Alice Ross sweeping up some sceptical analyst responses to the news from Brussels: The euro rally is already fading. Up less than 1 per cent on the day now. Some very bearish analyst notes still persisting this morning. And, in a research note entitled "Been here before," Barclays technical research analysts write: "We view the uptick in the EUR against major currencies as a reprieve, not yet a game changer. Given that we are at month and quarter end, the risk is that there is no follow through to the risk positive sentiment today. Kathleen Brookes at Forex.com was more upbeat: We think this action, although not the end of the road for the sovereign debt crisis, will help to ease sovereign strains in Italy and Spain. Thus, the markets may well extend their rally in the near to medium term and we could see a move towards 1.2650 first then potentially to 1.2750. But the prospect of a rate cut by the ECB next week could limit the euro's gains. Also, the rally could fade if the markets feel like to make a real difference the EFSF/ ESM need more money. 09.35: Many apologies, but we have had a big software glitch here which probably left you with a blank screen. Now restored previous material and trying to catch up with events. Thanks for your patience. 09.12: First word from the German chancellor this morning and, you will not be surprised to hear, she is not conceding that she made any concessions. Here's Bloomberg's report: German Chancellor Angela Merkel said Germany's philosophy that financial aid must carry conditions remains in place after European leaders eased repayment rules on emergency loans. "Our formula hasn't changed," Merkel told reporters as she arrived for day two of a European Union leaders summit in Brussels. I think we have taken some important decisions, but we remain true to our philosophy of no help without something in return. 09.07: FT markets reporter Mike Hunter points out that only one British banking stock has failed to enjoy a positive bounce in its share price this morning after the eurozone deal. Its name begins with a B. Bet you can't guess which one it is! 09.04: One important aspect of the EU deal which is spreading EU-phoria (I know, it isn't original) is the concession that bail-out money will not have seniority over other debt holders, as noted by Chris Whittall of Thomson Reuters: 08.58: Important contribution from the FT's Jamie Smyth in Dublin, who says the Irish government are reporting the deal as being retrospective, allowing them to get bank bail-out debt off their books and averting further crisis. Jamie's report: Dublin has hailed an EU summit deal, which will allow EU bail-out funds to be directly injected into eurozone banks, as a "game changer" for the country that will help it to escape the need for a second bail out. Eamon Gilmore, Ireland's deputy prime minister, said on Irish radio this morning the deal at the EU summit represented "a major change" in European policy and was something Dublin had been advocating for a long time. This is a massive breakthrough for Ireland and it changes the game in terms of our bank debt. This deal will allow the country to recover much faster," he said. Mr Gilmore said the EU summit deal would apply retrospectively for Ireland by enabling the European Stability mechanism- the EU's new bailout fund- to take stakes directly in Irish banks. He said the deal would help the country to borrow independently on financial markets and say goodbye to the troika, which monitors the country's EU-IMF bail out programme. Dublin has pumped €63bn into its main banks in one of the biggest bank bail-outs in world history. Its fateful decision in September 2008 to guarantee all deposits and liabilities in its banks eventually forced it into a bail out programme. 08.55: If it is not too self-indulgent, this live blog would like to pay tribute to Peter Spiegel and Josh Chaffin, who were following events through the night and finally called it a day (!) when the sun had been up for several hours. A marathon effort. 08.51: There are hints that a press conference with Angela Merkel is in the air, possible French PM Francois Hollande too. Meanwhile, the wires are quoting the first defence of her apparent concession by a strong German political ally, Hermann Groehe, general secretary of her party, the Christian Democratic Union. "The decisive point is that there have been massive attempts in the past days to achieve shared liability," Groehe said on ZDF public television, according to Bloomberg. The fact that Angela Merkel, supported by other countries, successfully averted that is good for Germany as a stability anchor and good for Europe.