Diversified exchange traded funds tracking European stocks have rallied back to their 50-day moving average on hopes leaders are on the right track to snuffing out the debt crisis.

Vanguard European ETF (NYSEArca: VGK) has bounced about 8% the past week. Germany and France said they are both on board to recapitalize troubled banks. Over the weekend, the two countries said they will submit a plan to stem the debt crisis before a European Union summit.

German Chancellor Angela Merkel and French President Nicholas Sarkozy are not disclosing any details about the package, and further wrinkles must be ironed out before they consult with the other 25 leaders in the EU, according to reports. [Europe ETFs Rise After Leaders Soothe Nerves Over Greece]

“We are determined to do whatever necessary to secure the recapitalization of our banks,” Angela Merkel said, reports The Washington Post. “A sound credit supply is the basis of sound economic development.” [Greece Again Weighs on European ETFs]

Together, Germany and France are the largest economies in the Eurozone and account for about half of the total export market. The banks in Germany and France will be contributing a healthy dose of capital to any bailout package. [Germany ETFs Rebounds on Merkel’s Euro Pledge]

European Central Bank President Jean-Claude Trichet said the crisis has reached a “systemic dimension,” Bloomberg reported Tuesday.

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