European Shares to Rally on News of Irish Bailout

European shares looked set to open sharply higher Monday as a deal to bail out Ireland from its debt problems was reached at the weekend.

The European Union and the International Monetary Fund are expected to offer loans totaling up to 90 billion euros ($123 billion) and Ireland will implement a new 15 billion euros austerity plan.

Bryce Duffy | Stone | Getty Images

European shares fell on Friday after China raised its banking reserve requirements, hurting miners on fears the move would hit global growth prospects, while concerns about the ongoing Irish debt crisishit banks.

Allied Irish, once the country's largest listed lender, announced on Friday thatcustomer accounts had plunged by 13 billion euros so far this year and that mortgage book arrears had continued to rise in the third quarter.

Ireland is also due to publish a four-year budgetary and growth plan early this week, ahead of budget day on Dec.7. The publication will reveal the size of the proposed spending cuts and tax increases next year.

Meanwhile, Greek Finance Minister George Papandreou told CNBC the right structures were now in place to deal with market turbulence. "We are in a much better place than we were some time ago," he said.

Greece recently announced that it would take more austerity measures to ensure it meets 2011's deficit-cutting measures, after it admitted it will miss this year's target under its bailout program with the European Union and the International Monetary Fund.

Federal Reserve Chairman Ben Bernanke hit back on Friday at critics of the US central bank's bond-buying program and issued a thinly veiled attack on China's policy of keeping its currency on a leash.

There are no major economic indicators due out in Europe on Monday.

Later this week, investors will turn their attention to euro zone industrial orders and Germany’s bellwether Ifo business sentiment index for November for clues on the strength of the economic recovery in Europe.