BERLIN, Sept. 29 (UPI) -- Germany's coalition government backed an expanded rescue package for the eurozone Thursday in a lopsided vote that gave investors a sigh of relief.
U.S. markets shot up higher at the opening bell and the DAX 30 in Germany jumped from a gain of 0.25 percent to a gain of 0.75 percent after the vote that passed by a far more comfortable margin than many predicted.
Legislators in Berlin voted 523 to 85 in favor of the bill with three abstentions.
The expansion, agreed to by European leaders in March and July but not yet implemented, is to raise the bailout fund's lending capacity to about $598 billion from about $340 billion and give the fund more flexibility in how it uses the money.
The fund can currently finance bailouts of stricken eurozone countries. But the changes, which are expected to go into effect next month, let the fund buy government bonds, inject capital into banks and lend to a country before it hits a full-blown crisis.
All parliaments of the eurozone -- 17 European Union countries that use the euro as their common currency and sole legal tender -- must approve the changes.
Finland's Parliament, whose lawmakers had resisted the bailouts, approved the fund expansion 103 to 66 Wednesday, the ninth eurozone country to OK the expansion.
European Commission President Jose Manuel Barroso Wednesday urged eurozone governments to speed up their anti-crisis efforts.
Before the vote in Berlin, some German officials had expressed their favor for a full-blown Greek debt default. Letting Greece default would let it restructure its debt, which would in turn reduce what the country owes creditors by as much as 50 percent, several aides and other people familiar with the matter told The Wall Street Journal.
The creditors include eurozone governments and International Monetary Fund, the global economy's lender of last resort to countries in crisis.
A default would let Greece simultaneously withdraw from the eurozone and reintroduce a national currency, such as the drachma, which was replaced by the euro in 2001.
Economists who favor this approach typically argue that a delay in organizing an orderly default would wind up hurting European Union lenders and neighboring European countries even more. Germany's official position has been to support allowing Greece to remain solvent, with Chancellor Angela Merkel lobbying for passage of the proposal that now requires passage in Austria, Cyprus, Estonia Malta, the Netherlands and Slovakia.
The default option is not the only reason the expanding the European Financial Stability Facility lost favor. Some believe the size of the fund, currently at $600 billion, is far smaller than it needs to be. New estimates put the necessary funding to keep struggling countries solvent at closer to $2.7 trillion.
There is also a domino effect. Portuguese Prime Minister Pedro Passos Coelho told his country's Parliament Wednesday Portugal might need a second bailout if another eurozone member defaulted. Portugal asked the EU for a $114 billion financial bailout in May.
Greece received a $158 billion bailout a year earlier and economists say it needs a similar-size second bailout to stay afloat until 2014.
In his annual state of the European Union address President Barroso he said the bloc faced "the biggest challenge in all its history" and risked falling apart if it didn't quickly come together soon.
He called the sovereign-debt crisis a "crisis of political confidence" and a "baptism of fire for our whole generation."
