Global markets strengthened Monday on news the Cypriot banking system will be rescued and the tiny euro zone nation won't exit the monetary union.

Markets were all trading up in Asia, with the Nikkei 225 up 1.69 percent by early Monday morning in New York. Germany’s DAX and the CAC 40 in Paris surged more than one percent in midday trading. 

U.S. futures also pointed to a higher open on Monday: Futures on the Dow Jones Industrial Average were up 0.26 percent, futures on the Standard & Poor's 500 Index were up 0.34 percent and those on the Nasdaq 100 Index were up 0.45 percent.

The euro received a bump during Asian trading on the news that Cyprus' worst case scenario had been averted, and was trading above Friday’s close. The currency was trading at $1.301, slightly higher than the $1.298 it close at on Friday. The euro had dropped to $1.286 after the deal to levy Cyrpus banks accounts was initially dismissed by the country’s lawmakers early last week. Citigroup Inc. (NYSE:C) analyst Steve Englander told the Wall Street Journal that he expected the euro to slide throughout the day on Monday.

"I think the market will put Cyprus behind it from now. It is a small country, so the impact will be limited," a trader at a Japanese bank told Reuters.

The deal worked out early Monday in Nicosia differs considerably from the one announced Friday. Instead of assessing a 6.75 percent levy on all deposits in Bank Laiki under €100,000 ($129,830), those deposits will be moved to Bank of Cyprus and protected. Those accounts with balances over that amount will be frozen and owners may lose all their money. Senior bond holders in Laiki also will be wiped out.

Balances in the Bank of Cyprus, the nation's biggest financial institution, that are under €100,000 also will be protected but those greater than €100,000 will be frozen and some significant percentage will be taken by the government to contribute to the banks' rescue.

While the deal amounts to a collective sigh of relief for the euro zone, it doesn’t bode well for the local economy, which will see a significant hit to its gross domestic product this year as its large banking system loses its status as an ideal place for foreigners – especially wealthy Russians – to park their funds offshore.