"There are grounds for cautious optimism in the latest news from Europe," he said in a speech at a Commonwealth business summit in Perth.

"Obviously the situation is still evolving. However, I see as positive steps the actions taken by our European friends just a few hours ago."

After days of talks and two successive summits, European leaders early Thursday announced a plan to shore up their bailout facility, pledging new funds for Greece and persuading banks to share the pain.

The development came as global powers, from the United States to Japan and China, pressed European leaders to come up with a lasting solution to the debt crisis before a G20 summit in France on November 3 and 4.

"The G20 must reaffirm its unequivocal pledge to the full and timely implementation of the financial-sector reform agenda that was agreed to in previous summits," added Harper, who will attend the Cannes meeting.