LONDON (AP) – World stock markets and the euro soared Monday as investors cheered the European Union's $1-trillion plan to defend the embattled 16-country currency and keep a spreading debt crisis from damaging the global economic recovery.

After last week suffering some of the biggest losses since the height of the financial crisis in 2008, European markets rebounded decisively. The euro jumped above $1.3071, after wallowing at a 14-month low of $1.2523 on Friday.

Britain's FTSE 100 index rose 4.1 percent to 5,350.05, Germany's DAX gained 3.9 percent while the CAC-40 in France soared 6.7 percent.

In Asia, Japan's Nikkei 225 stock average rose 1.6 percent to 10,530.71 and Hong Kong's Hang Seng index jumped 2.5 percent to 20,426.64. The dollar rose to 93.38 yen from 92.37 yen late Friday.

Wall Street was also expected to jump higher on the open – Dow futures were up 3.5 percent at 10,694 and Standard & Poor's futures were 4.6 percent higher at 1,158.30.

Crucially, borrowing costs for debt-laden countries plummeted.

The difference between yields on Greek 10-year bonds and their benchmark German equivalents was at 4.84 percentage points on Monday, down massively from a record 10.25 points last week.

In a three-year plan, the European Commission will make euro60 billion ($75 billion) available for loans and guarantees to indebted European countries. The 16-nation eurozone promised backing for another euro440 billion ($570 billion), should it be necessary, and the International Monetary Fund would contribute an additional sum of at least half of the EU's total contribution, or euro250 billion.

In addition, the European Central Bank announced what analysts called its ``nuclear option'' _ buying public and private bonds to lower borrowing costs and increase liquidity. Meanwhile, the U.S.
Federal Reserve reopened its dollar swap operations, in which it offers billions of dollars overseas to boost banks' cash positions in return for foreign currency. Other central banks, including the Bank of Canada, the Bank of England, the ECB, the Bank of Japan and the Swiss National Bank, are also involved in the effort.