Markets fail to rally on Greece debt deal

European markets were flat this morning after Greece last night won a second bail-out, worth €130bn that saves it from bankruptcy, after exhausting talks lasting over 13 hours.

The Dax wasdown a modest 0.34%, while the Cac 40 fell 0.44% by 0930 CET.

The euro rose to about 1.326 versus the US dollar, having climbed overnight modestly from around 1.322.

And despite the apparently good news, gold futures still rose, by 0.6%.

The bail-out cash will save Athens from defaulting on a bond payment due on 20 March. It would have been the first default in eurozone history.

But the International Monetary Fund believe Greece’s debt may still be 160% after the deal – far above the 120% they had hoped for.

The IMF has said in the past 120.5% is sustainable.

Greece had made clear where it could make a further €325m of savings – as required by the lenders.

“Everybody understood that this was the moment of truth,” Belgian Finance Minister Steven Vanackere told reporters.

According to Bloomberg Brussels is also considering boosting the general emergency fund to €750b, 25% more than the €500bn originally planned, when the existing bailout facility and a new one are joined together later this year.

Under the deal, lenders will also have more control over how Greece spends its money. A special account will be established, and disburse money for the national budget, but its primary goal will be keeping the country solvent.

A European Commission monitoring group will also be present in Greece.


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