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Greek stocks surge after European debt deal
Greek stocks surge after European debt deal, banks boosted despite expected bond losses
By The Associated Press

ATHENS, Greece (AP) ' Shares on Greece's stock market rose sharply Thursday following a debt deal reached by European leaders, but politicians and analysts reacted cautiously while scrambling to gather details of the landmark agreement.

In early afternoon trading, shares on the Athens Stock Exchange joined a surge in world markets and were up 5.95 percent at 819.89, with banking stocks up nearly 12 percent ' after suffering heavy losses earlier this week.

Greece's sky-high rates for long-term borrowing and default insurance also eased slightly.



The deal requires banks to take on 50 percent losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional euro100 billion ($140 billion) in rescue loans as a second bailout package for Greece.

"We have avoided a mortal national danger," Socialist Prime Minister George Papandreou told a news conference in Brussels after the night-long negotiations.

"Today we have the ability to close our accounts with the past," he said. "A burden from the past has gone, so that we can start a new era of development, on our own steam."

His government this week abandoned talk of seeking opposition support for a three-fifths majority in the 300-seat parliament to approve the new debt deal ' avoiding the risk of an early general election after rival parties indicated they would vote against it.

The Socialists have 153 seats in parliament, its majority whittled down from 10 seats over two years by opposition to harsh austerity measures that have triggered frequent strikes, mass protests and violent demonstrations.

In the northern city of Thessaloniki, the government did not send a representative to an annual parade by high school students for national holiday celebrations, a day after anti-austerity protesters in the city heckled and threw eggs at the country's defense minister.

Opposition parties and some analysts appeared critical of Thursday's deal.

"There's absolutely nothing in the package that was agreed that gives us even a modicum of hope that anything along the lines of (economic) development is happening," Yanis Varoufakis, professor of economics at the University of Athens, told AP television.

"We have more austerity and more wishful thinking in terms of how much liquidity can be extracted from the Greek economy, either through privatization or through taxation, in order to pay for these deals," he added.

Greece, with its troubled euro230 billion ($320 billion) economy heading into a fourth year of recession, has been hard hit by austerity, with unemployment at 16.5 percent and taxpayers struggling to cope with a barrage of emergency taxes on property, purchases and their shrinking income.

Costas Markopoulos, parliamentary spokesman for the main opposition conservatives, urged caution when gauging the debt deal, noting that past European debt agreements had unraveled or failed to improve the sustainability of Greece's euro350 billion ($490 billion) national debt.

"This will undoubtedly impose an additional burden (on taxpayers)," Markopoulos told private Skai television. "Does anyone believe that as we stand on the edge of the cliff, after they have shaved off our debt, that they will offer us anything (positive)?"

Prominent left-wing deputy Dimitris Papadimoulis said the agreement would doom Greeks to a deeper recession.

"The deal puts Greece in a eurozone quarantine," he said. "We are now locked in a system of continuous austerity, haphazard privatization, and continuous supervision by our creditors."

He also noted an inherent conflict of interest in the European debt plan.

"Those who monitor us do not have our interests in mind. Their priority is that we pay back our loans," Papadimoulis said.

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AP writer Costas Kantouris in Thessaloniki contributed.


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