Markets buoyed by news of Greek debt deal

LONDON—Markets were shored up by the news that Greece's party leaders agreed a deal on new cuts that are necessary for the country to get crucial bailout funds. Greece needs the €130 billion (US$172 billion) of bailout money and a €100 billion reduction of its private sector debt to avoid defaulting on its debts next month when a big bond repayment is due— scenario that could send shock waves all round the European economy. That unappetising prospect appears to have subsided after the office of Prime Minister Lucas Papademos' office said negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund have been successfully concluded. A statement from Papademos’ office Thursday said leaders of the parties in the coalition government have accepted the result of talks with the three organisations, collectively known as the troika.

 

Following confirmation that a deal has been agreed, stock markets, the euro and oil prices rose. Though the prevailing view has for weeks been that Greece would get its bailout, there was still an element of doubt especially as the talks dragged on for days longer than anticipated. In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 5,895 while Germany's DAX rose 0.6 per cent to 6,788. The CAC-40 in France was 0.4 per cent higher at 3,424. The euro was trading up 0.4 per cent at USUS$1.3286, just shy of its earlier two-month high of USUS$1.3313. Oil markets rallied as news filtered through of the agreement in Athens, which should help ease concerns about the immediate prospect of a Greek default—benchmark oil for March delivery was up 97 cents to USUS$99.69 a barrel in electronic trading on the New York Mercantile Exchange. (AP)