Europe's financial markets are picking up where they left off atthe end of 2013, extending a rally in bonds and stocks that'smaking the region's sovereign debt crisis little more than a fadingmemory.

Ireland sold bonds this week, returning to financial marketsafter completing a three-year bailout program. Portugal—another aidrecipient—is holding a sale today. Banks in Spain and otherperiphery countries have never been able to borrow as cheaply asthey can now. The Stoxx Europe 600 Index of stocks closed at itshighest level since May 2008 yesterday, and the euro is about itsstrongest since 2011 against the dollar.

Such is the confidence in Europe that Greece, which sparkedEurope's sovereign-debt woes in 2009 and required two bailouts,said yesterday that it may sell bonds this year. That would mark aturnaround in the region after nations were shut out of debtmarkets, triggering the collapse of governments and causingunemployment to top 12 percent. It took a pledge from EuropeanCentral Bank (ECB) President Mario Draghi in July 2012 to “dowhatever it takes” to keep the currency bloc from breakingapart.

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