European stock markets rose and the euro rallied on Wednesday after the eurozone cleared a key hurdle towards resolving its debt crisis as Germany's top court approved a new firewall.
In a landmark ruling watched around the world, the Constitutional Court overturned a raft of legal challenges aimed at preventing President Joachim Gauck from signing two crucial crisis-fighting tools into law.
Delivering a momentous decision with far-reaching implications for the euro's future, the Bundesverfassungsgericht said Gauck could finally sign the European Stability Mechanism (ESM) and fiscal pact.
In reaction, Germany's DAX 30 gained 0.82 percent 7,370.25 points in late morning deals, the Paris CAC 40 climbed 0.72 percent to 3,562.83 points helped by a rise by banking shares, and London's FTSE 100 index of top shares advanced 0.28 percent to 5,807.95.
Madrid gained 1.0 percent and Milan advanced by 0.96 percent.
In foreign exchange deals, the euro rose to briefly trade above $1.29 for the first time for four months.
It later stood at $1.2889, which compared with $1.2848 late in New York on Tuesday.
The German court ruling came as an anti-austerity party was set to score big gains in Dutch elections and as EU leaders unveil plans for the first step towards a eurozone banking union.
All eyes were also on the Federal Reserve, whose policy board was expected to embark on fresh monetary easing measures as it meets Wednesday and Thursday to address a weak US economy and stagnant job creation.