German Chancellor-in-waiting Friedrich Merz reached an agreement with the Greens on Friday on a massive increase in state borrowing just days ahead of a parliamentary vote next week.

German government bond yields, equities and the euro all rose on Friday on reports Germany's Chancellor-in-waiting Friedrich Merz had reached an agreement with the Greens to reform debt rules and massively increase state borrowing.

An agreement has been reached on plans by German chancellor hopeful Friedrich Merz to massively ramp up public borrowing, a source from the Greens party said on Friday, adding: "We are satisfied." Greens' support is seen as crucial to Merz's bid to pass the debt plan with a two-thirds majority in Germany's outgoing parliament.