Markets and euro surge after Spain's bank deal. Reuters

Global financial markets, the euro and shares across the world responded positively to the bailout plan of Spanish banks.

The euro surged almost one percent to $1.2671 on Monday from the $1.2514 on Friday against dollar, the highest in the past few weeks.

Markets across the world seemed to be rejoicing over the bank deal as most of them have seen a considerable rise on Monday.

Asian markets, including the main indexes of Japan, Hong Kong and South Korea have witnessed a rise of about 2 percent. The MSCI Asia Pacific index rose about 0.8 percent, the first rise in four weeks. Hong Kong's Hang Seng index zoomed 2.2 per cent while China's Shanghai Composite index edged up 0.4 per cent, the Financial Times reported. Australia's markets were closed for a holiday, the paper said.

The 17-nation single currency bloc agreed to lend 100 billion euros (£80bn) to Spain for the bailout of its troubled banks. The exact amount that the country will receive will be decided in the next few days.

"The immediate effect on financial markets should be beneficial. Equity markets especially respond well to short-term improvements, while bond markets, especially higher-quality debt, might continue to send out signals in the form of very high prices and low yields that the trouble is not over," Reuters quoted a macro and consumer strategist at Global Hunter Securities, Richard Hastings as saying.

The collapse of the property boom and the recession left some of the Spanish banks with billions of euros worth bad loans.

The EU has been bailing out the troubled economies of Greece, Ireland and Portugal since 2010.

Although the markets' positive reaction has been immediate, it is going to be a wait and watch game for the next few months, suggest analysts.

"The next phase of the Spain situation comes in six to nine more months when it becomes clear that Spain's economy has not improved, thus pointing to a wider realm of distress. That is indeed the primary concern for the entire European situation: that the relationship between banking, credit and growth remains fragmented and impaired," Hastings added according to the Reuters report.

Spanish Prime Minister Mariano Rajoy also praised the decision and said this is a victory for the single currency. The bailout amount was much higher than the earlier estimate suggested.

Speaking about the bank's deal on Sunday, Rajoy added the credibility of the single currency euro has once against proved itself. Although he conceded that the immediate economic future of Spain will remain tough as it has faced two recessions in three years.

The decision has been widely welcomed by everyone across the globe including the International Monetary Fund (IMF).

Nevertheless, European leaders are keeping their fingers crossed as Greece is to face elections in a week's time which will decide not only the country's fate but also the future of the single currency bloc.

If the elected party refuses to comply with the previous bailout terms, the country may be expelled which in turn will badly affect the eurozone.