European stock markets surged and the euro topped $1.44 on Thursday as a draft summit deal showed the eurozone will provide loans on improved terms to debt-ridden members Greece, Ireland and Portugal. In late afternoon deals, London shares rebounded 1.14 percent, Frankfurt gained 1.21 percent and Paris jumped 1.96 percent, while Milan rocketed nearly four percent and Madrid leapt more than three percent. And the European single currency soared to $1.4402, hitting a high last seen on July 6. It later stood at $1.4383, still up very sharply from $1.4212 in New York late Wednesday. On Wall Street, stocks were up sharply in early trade on news that European leaders were nearing a deal to take the pressure off the eurozone's most troubled economies. The Dow Jones Industrial Average jumped 1.01 percent in the first 30 minutes of trade. "A second bailout for Greece has clearly been agreed via lower interest rates and extending maturity of loans," RIA Capital Markets analyst Nick Stamenkovic told AFP. The eurozone will provide loans with lower interest rates and longer maturities to countries in financial trouble, according to a draft agreement from Thursday's emergency summit in Brussels. The loans will be extended from 7.5 years to 15 years while the rates would be lowered from 4.5 percent to 3.5 percent, according to the draft being considered by eurozone leaders. The measures had already been agreed by eurozone finance ministers on July 11 but the details had yet to be worked out. Greece and Ireland have long advocated easier loan conditions from the eurozone's crisis fund, the European Financial Stability Facility (EFSF), arguing that the terms were too strict for them to clean up their finances. "The euro is staging a relief rally on the back of the leaked draft EU statement on Greece," said research director Kathleen Brooks at trading site Forex.com. "The document suggests that .. the EFSF rescue fund will be extended and ... the maturity and interest rate on Greek bailout loans will be moderated to ease the burden on Athens. "The markets are happy with this, hence the euro is rallying ... (but) this detail is not enough to sustain the rally." The European Union and the IMF offered Greece a three-year, 110-billion-euro rescue package in May 2010 but that has proved insufficient, forcing eurozone leaders to negotiate a second emergency plan for Athens. The new bailout will likely also include new eurozone and IMF loans which could reach 71 billion euros ($101 billion), according to diplomats. Private bondholders such as banks, insurers and investment funds will also contribute to the plan, meeting a central demand by Germany. "Overall, the markets feel quite secure that significant progress will be made today that will probably change the shape of the eurozone as we know it," Brooks said. "History is in the making -- we suspect there will be steps to closer economic and fiscal integration after today's summit." At the same time the dollar was hit hard this week as investors waited for a resolution to the US debt stand-off. Traders were closely watching developments in Washington, where US President Barack Obama was set to meet with opposition Republican leaders again in an effort to seek a compromise solution.