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London shares recover after fall

London's top shares index has swung wildly as jumpy investors digested emerging details of a eurozone rescue plan which would reportedly allow Greece to default on half its debts.

The FTSE 100 Index dropped nearly 100 points to below the 5,000 mark before a stuttering recovery saw it close 0.4% higher.

The International Monetary Fund (IMF) is working on a series of emergency measures to rescue the euro, thought to cost two to three trillion euros (£2.6 trillion).

European markets experienced a stronger rally, with Germany's Dax closing nearly 3% higher and France's Cac-40 finishing nearly 2% ahead.

Britain's top 100 companies saw £78 billion wiped from their value last week as the sovereign debt crisis and America's creaking public finances fuelled fears of another global recession.

Yusuf Heusen, sales trader at IG Index, said markets were giving politicians the benefit of the doubt over resolving the Greek debt crisis - but warned that the patience was unlikely to last.

Mr Heusen warned that if plans did not emerge in the next few days, shares could experience "another lurch back to the August lows".

Pumping cash into at least 16 of Europe's beleaguered banks is the cornerstone of a rumoured three-pronged plan being discussed to save the single currency.

The shoring-up of vulnerable banks would allow Greece to partly default on its debt - wiping billions of pounds from the country's balance sheet and allowing the country to remain within the eurozone.

The third part of the plan involves providing additional firepower for the European Financial Stability Facility (EFSF) - the bailout fund - which could cost trillions of euros.

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