Euro deal leaves much to do on rescue fund, Greek debt

BRUSSELS, (Reuters) – Euro zone leaders struck a  last-minute deal today to contain the currency bloc’s  two-year-old debt crisis but are now under pressure to finalise  the details of their plan to slash Greece’s debt burden and  strengthen their rescue fund.
After a summit in Brussels, governments announced an  agreement under which private banks and insurers would accept 50  percent losses on their Greek debt holdings in the latest bid to  cut Athens’ 360 billion euro debt load to sustainable levels.
Economists polled by Reuters today were split down the  middle over whether the writedown was big enough, with 24 of 47  saying it wasn’t and the remainder saying it was.
Reached after more than eight hours of hard-nosed  negotiations between bankers, heads of state and the IMF, the  deal also foresees a recapitalisation of hard-hit European banks  and a leveraging of the bloc’s rescue fund, the European  Financial Stability Facility (EFSF), to give it firepower of 1.0  trillion euros ($1.4 trillion).
U.S. stocks surged more than 2 percent in early trade and  European shares climbed 4 percent to a 12-week high on the deal.  They were led higher by banks which raced up over 9  percent, with BNP , Societe Generale and  Credit Agricole of France leading the way.
The euro shot above $1.41 to reach its top level against the  dollar in seven weeks.
But key aspects of the deal, including the mechanics of  boosting the EFSF and providing Greek debt relief, could take  weeks or even months to pin down, raising the risk of the plan  unravelling as the last one did.
“I see the main risk is that we are left waiting too long  again for the implementation of these agreements,” European  Central Bank policymaker Ewald Nowotny said today. “Speed  is very important here,” he told national broadcaster ORF.
Three months ago, euro zone leaders unveiled another  agreement that was meant to draw a line under the debt woes that  threaten to tear apart the 12-year old currency bloc.
In a matter of weeks they realised it was inadequate given  the depth of Greece’s economic problems and the vulnerability of  European banks.
The new deal aims to address these holes.

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