Questions loom as Europe inks new Greek bailout

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Eurozone finance ministers agreed to a €130 billion rescue for Greece on Tuesday, averting a messy default, by forcing Athens to commit to unpopular cuts and private bondholders to take big losses.

The complex deal was inked in lengthy overnight agreements. It buys some time to stabilize the 17-nation currency bloc and strengthens its financial boundaries, but it leaves myriad doubts about Greece’s ability to recover and avoid default longer out.

After 13 hours of talks, finance ministers agreed to cut Athens’s debt to 120.5 percent of gross domestic product by 2020, just a fraction above the target. The measure averted what would have been a devastating and chaotic default on Greek bond repayments due in March. It is Greece’s second bailout in two years.

Greece will be placed under permanent surveillance by an increased European presence on its home turf, and will have to deposit funds to service its debt in a special account to guarantee repayments.

The deal provides time for the eurozone to put new crisis measures in place over the coming months. It also means that Greece will struggle for months.

U.S. markets reacted cautiously and with fresh doubts.

Just after the opening bell on Wall Street, the Dow Jones Industrial Average was up 25 points, the Standard & Poor’s 500 Index rose 4 points and the NASDAQ gained 7 points.

In commodities, oil continued to rise after Iran cut shipments to Britain and France. In morning trading, crude gained $ 1.54 to $ 104.78.

The lingering doubts surrounding markets buoyed gold. The yellow metal jumped $ 22 to $ 1,746.00 a troy ounce.

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