Markets rally as France and Germany back struggling Greece

In early trading, Tokyo was up 1.75 per cent and Sydney rose 1.65 per cent.

After a teleconference on Wednesday with Greek Prime Minister George Papandreou, German Chancellor Angela Merkel and French President Nicolas Sarkozy said they were convinced the future of Greece is in the Eurozone.”

A statement from the French president’s office said: “The Greek prime minister confirmed his absolute determination to put in place all the necessary measures to carry out all of the commitments made.”

Dossier: Eurozone in crisis

Athens had been warned that failure to overhaul its economy could cost vital funds from the 110-billion-euro bailout package agreed last year.

International auditors are to decide soon whether to release the next eight billion euro tranche in rescue loans which would prevent Greece from running out of cash as early as next month.

Some eurozone countries are increasingly frustrated at the slow pace of enacting agreed reforms.

Earlier this week, Merkel tried to calm worries caused by several German officials who said that an orderly insolvency for Greece or even a eurozone exit was possible.

Some analysts have admitted the markets are already working on the scenario of a Greek default.

Elsewhere there are signs that patience in running out with the situation in the eurozone.

China’s premier Wen Jiabao has called on European governments to “put their own house in order" while World Bank President Robert Zoellick has called the 17-national eurozone “irresponsible” for running a monetary union without any fiscal discipline.