EU approves rescue for Ireland, oil rises to two-week high above $85

Oil rose to a two-week high above $85 on Monday after the European Union approved a rescue for Ireland and outlined a permanent system to resolve the euro zone's debt crisis.

Worries that a spreading crisis within the euro zone would keep a lid on growth and hence energy demand have helped pressure commodities prices over the last week, pulling down oil from a two year high of $88.63 on November 11, Reuters informs.

The euro gained to $1.3255 as of 8:55 a.m. in Tokyo from $1.3242 in New York last week. It touched $1.3201 on Nov. 26, the weakest since Sept. 21. The common currency was at 111.54 yen from 111.37 yen. The dollar was at 84.16 yen from 84.10 yen on Nov. 26, when it reached 84.19 yen, the strongest since Sept. 28.

Ireland said it will pay average interest of 5.8 percent on the package, which breaks down into 45 billion euros from European governments, 22.5 billion euros from the International Monetary Fund and 17.5 billion euros from Ireland's cash reserves and national pension fund. The European finance ministers agreed a future crisis-management system won't automatically cut the value of bond holdings, Bloomberg says.