Itsuo Inouye, Associated Press
LONDON — Markets were subdued Wednesday as investors worried that the Greek bailout plan might not be enough to keep the country from eventually defaulting on its debts and possibly leaving the euro currency bloc.
Under a deal reached Tuesday, Greece will get €130 billion ($172 billion) from its partners in the 17-nation eurozone and the International Monetary Fund to meet its immediate debt obligations. It is Greece's second bailout following a €110 billion ($146 billion) rescue in 2010.
Separately, Greece's private sector bondholders will be asked to forgive €107 billion ($141 billion) in Greek debt by taking a 53.5 percent loss on the face value of their bonds and accepting longer repayment periods and lower interest rates.
Though Greece's finance minister Evangelos Venizelos hailed the deal as "a significant development that gives our country a new opportunity," investors remained cautious, not least because Greece has to enact economic reforms in a very short space of time to get its hands on the money.
The package's lack of measures aimed at boosting economic growth also caused concern in the markets. Greece is entering its fifth year of recession and is forecast to contract a further 4 percent or so this year.
"There are still a lot of moving parts in order for Greece to actually achieve the bailout of course and doubts remain about their ability to keep to the terms and conditions over the medium term," said Gary Jenkins, managing director of Swordfish Research.
Those doubts have weighed on markets Wednesday, with Germany's DAX down 0.9 percent at 6,848 and the CAC-40 in France 0.4 percent lower at 3,452. The FTSE 100 index of leading British shares was down 0.4 percent at 5,906.
Wall Street was poised for a weak opening later, with Dow futures and the broader S&P 500 futures 0.1 percent higher.
Markets will continue to monitor developments in Athens Wednesday as the country's lawmakers start debating emergency legislation to approve the private debt relief deal and the promised spending cuts, while unions plan a new anti-austerity rally outside Parliament.
Unions are angry at two years of belt-tightening, and have called a rally for 4:00 p.m. Previous protests have turned violent, and rioters burnt and looted dozens of shops in central Athens during a rally on Feb. 12.
In the currency markets, the euro was flat at $1.3235 even after a surprisingly big 1.9 percent monthly increase in eurozone industrial orders in December. Analysts said the figures are prone to volatility.
The British pound was the big mover in the currency markets, falling around half a cent against the dollar to $1.5719 after minutes to the last rate-setting meeting of the Bank of England showed that two of the nine members of the Monetary Policy Committee voted for a 75 billion pounds monetary stimulus. The other seven backed a 50 billion pounds rise.
The disclosure that some on the MPC were arguing for a larger injection stoked speculation that the Bank is not done with its controversial strategy of pumping more money into the ailing British economy.
"Any attempt by the Bank to predict the future is clouded in political uncertainty," said Daniel Solomon, economist at the Centre for Economic and Business Research. "The future of the U.K. economy depends on deals made in Brussels and Athens over the coming years and a possible military showdown involving Iran, Israel and the U.S."
Earlier in Asia, stocks were generally buoyant despite another fairly weak Chinese manufacturing survey.
The preliminary reading of HSBC's China manufacturing index rose from 48.8 in January to 49.7 in February. But the number was still below the 50-level that signifies expansion, suggesting that the Chinese central bank may loosen credit — a move typically welcomed by markets.
- LDS missionaries developing strategies to...
- 50 things you might not know about 15 of your...
- Judge orders Colo. cake-maker to serve gay...
- Pearl Harbor ceremony marks bombing...
- Nelson Mandela's faith made him a worldwide...
- Space and religion: How believers view latest...
- Utah remembers Pearl Harbor namesake ship,...
- Snow, ice, deep-freeze hit large swath of US
- Obama: Income inequality a defining... 106
- Judge orders Colo. cake-maker to serve... 81
- LDS missionaries developing strategies... 47
- Fast-food strikes return amid push for... 31
- Colorado court hears discrimination... 30
- Utahns react to death of Nelson Mandela 26
- Research: Native American genes have... 23
- Obama declares health care law is... 21