Greek deal pleases markets

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Greek deal pleases markets

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The financial markets welcomed the new rescue package agreed for Greece and shares rose in value across Europe.

The relief rally in Athens pushed the main stock market index there up close to six percent.

Greek banks featured among the top performers, along with French banks which have heavy exposure to Greece. National Bank of Greece was the sector’s top gainer, up 9.4 percent.

However Italian, Spanish and some core European lenders gave back some of the previous session’s hefty gains due to profit taking and on concerns the deal would not be enough to prevent the debt crisis spreading in the longer term.

Italy’s UniCredit and Intesa Sanpaolo were the biggest fallers, down 4.6 percent and 2.9 percent, respectively.

David Jones, chief market strategist for IG Group, said the relief may be short lived: “There seems to be a sense of relief that there has been a concrete plan now for trying to stop the contagion. I think it has hung over markets for so long, this problem, but for today at least I think there is this sense of relief and a lot of buying again of risks assets in Europe.”

In the currency market, the euro was down. It slipped against the dollar on Friday as investors focused on how the second rescue package for Greece and measures to stop the European debt crisis from spreading will be implemented.

The price of gold, which is considered to be a safe haven in times of economic uncertainty, rose indicating that investors remain nervous they have also shifted their focus across the Atlantic to Washington’s debt-reduction struggle.