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Germany's Constitutional Court gave a green light on Wednesday for the country to ratify the euro zone's new bailout fund and budget pact, but insisted the German parliament have veto powers over any future increases in the size of the fund.

The eagerly awaited verdict boosted global stocks and the euro currency as investors breathed a sigh of relief that the euro zone's rescue fund for nations in crisis could soon take effect after months of delay.

Germany is the only country in the 17-nation euro zone that has yet to ratify the European Stability Mechanism (ESM), which is meant to erect a 700 billion-euro firewall against the spread of the three-year-old sovereign debt crisis.

"This is a good day for Germany and a good day for Europe," German Chancellor Angela Merkel said in a speech to parliament.

It said German liability in the rescue fund must be limited to 190 billion euros, the share set out in the current ESM treaty, and that any increase in that amount would require prior approval by the Bundestag lower house of parliament.

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