German lawmakers have reached an agreement to exempt some defense spending from the nation’s tight rules on running up debt.

LONDON (Reuters) - Euro zone shares and the euro rallied on Friday following news that German Chancellor-in-waiting Friedrich Merz reached an agreement with the Greens on a massive increase in state borrowing just days ahead of a parliamentary vote next week.

Germany 's likely next chancellor urged lawmakers Thursday to exempt some defense spending from the nation’s tight rules on running up debt, an issue of growing urgency as doubts increase about the U.