EU sets massive defense package for embattled euro

The European Union and the International Monetary Fund pledged nearly $1 trillion Monday to defend the embattled euro, hoping to repel relentless attacks on the weakest of Europe's debt-laden nations and prevent the common currency from disintegrating.

Central banks around the world joined the coordinated effort to prop up the euro and prevent Europe's debt crisis from derailing the global economic recovery. The U.S. Federal Reserve reopened a currency "swap" program to ship billions of U.S. dollars overseas in a bid to pump more short-term cash into the financial system and ensure banks have the dollars they need. Separately, the ECB jumped into the bond market, saying it is ready to buy debt from the eurozone — EU nations that use the euro — to shore up liquidity in "dysfunctional" markets.

The euro climbed to $1.2963, up from the 14-month low of $1.2523 it hit late last week. "We shall defend the euro whatever it takes," EU Commissioner Olli Rehn said after an 11 hour-meeting of EU finance ministers that capped a hectic week of chaotic sparring between panicked governments and aggressive markets.

Officials hope the massive sums will deter currency speculators from betting on a euro collapse after political posturing and soothing words failed to convince investors that Greece's financial implosion could be contained.

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