Eurozone finance ministers agreed on Friday to raise their financial firewall to prevent a new flare-up of Europe’s sovereign debt crisis, but it was unclear if markets and Europe’s G-20 partners would see the boost as sufficient. The 17-nation currency area agreed to combine its two rescue funds to make €500 billion of new funds available in case of emergency until mid-2013, on top of €200 billion already committed to bailouts for Greece, Ireland and Portugal. The executive European Commission had proposed raising the total amount to €940 billion, of which €740 billion would have been as yet uncommitted funds, but EU paymaster Germany resisted a higher number. Initial market reaction was positive, with the yields on Spanish bonds falling as investors weighed the ministers’ decision and awaited a draconian Spanish austerity budget. “Today’s decision is a classic European compromise. It was as far as the German government was willing to go and it was the minimum most other eurozone countries were expecting,” said Carsten Brzeski, economist at ING bank in Brussels. “With today’s increase, the role of the ECB (European Central Bank) as eurozone fire brigade is likely to continue.” An official statement said ministers had lifted the combined lending capacity of the temporary European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM) to €700 billion from €500 billion. “The current overall ceiling for ESM/EFSF lending ... will be raised to €700 billion,” it said. “All together, the euro area is mobilising an overall firewall of approximately €800 billion, more than $1 trillion.” However, the highest headline number included money already disbursed from the EFSF, a smaller bailout fund controlled by the European Commission and bilateral loans which eurozone countries extended to Greece under the first bailout. The €500 billion in fresh lending capacity for the combined funds until July 2013 takes account of the fact that the ESM will not start its operations at full capacity, but only grow into it as capital is paid in over three years. It means €240 billion of uncommitted funds in the EFSF could be tapped if necessary until the ESM becomes bigger.