The euphoric rally in share prices fed by a European deal to cut Greece's debt and prevent larger countries from falling down the same hole slowed on Friday, as investors began to recognize the significant challenges that still face the continent.
In the weeks before Thursday's agreement, markets had seesawed between hope that Europe would find a way to stop the crisis' march and despair that their response would be too cautious. After several delays and half-measures, the deal to greatly increase the firepower of the continent's bailout fund and to knock euro100 billion ($140 billion) off of what Greece owes hit the right notes, and stocks rocketed up on Thursday.
But analysts immediately raised questions about the lack of detail in the plan, and the euro and oil prices began pulling back on Friday.
"The best we can say is that the EU have engineered a temporary reprieve but there is no guarantee of a final resolution to the crisis," said Neil MacKinnon of VTB Capital.
Of particular concern is exactly how the bailout fund's new powers will work. The hope is that by using the euro440 billion ($615 billion) European Financial Stability Facility to insure against some losses on the bonds of wobbly countries like Italy and Spain, Europe will be able to avoid ever having to mount a rescue again.
A first test of how much this has reassured investors could come Friday, when Italy auctions off bonds. Worries about Italy have driven up its bond yields _ how much it has to pay to borrow _ and the fear is it could eventually be unable to afford to borrow from markets, as Greece was.
"It is all too obvious that the outlook for Italian bond yields is closely intertwined with the fate of EMU (European Monetary Union)," said Jane Foley, an analyst with Rabobank. "If Italian bond yields can be contained the chances that EMU can continue to stumble forward are good. If not, the outlook is dire."
Also, although the deal threw a lifeline to Greece, it asks banks to shoulder much of the cost by accepting losses of 50 percent on the Greek bonds they hold. Many of the continent's banks are already struggling with tighter access to the loans they need to run their day-to-day operations, and the prospect of substantial losses could further weaken them.
Markets appeared to be starting to absorb some of that skepticism by Friday and saw only small gains.
Britain's FTSE 100 was up 0.2 percent at 5,723.71. Germany's DAX gained 0.6 percent to 6,376.85 and France's CAC-40 rose 0.5 percent at 3,385.93.
The euro was already pulling back after a meteoric rise in the hours after the deal was agreed. It fell 0.2 percent to $1.4153 on Friday.
Wall Street was expected to open lower. Dow Jones industrial futures fell 0.2 percent to 12,140 and S&P 500 futures were 0.3 percent lower at 1,278.50.
Earlier in Asia, stocks were still riding the bump from the deal.
Japan's Nikkei 225 index jumped 1.4 percent to close at 9,050.47, its highest close since Sept. 1. Hong Kong's Hang Seng gained 1.7 percent to 20,01924 and South Korea's Kospi rose 0.4 percent to 1,929.48.
Australia's S&P/ASX 200 gained 0.1 percent to 4,353.30 and the Shanghai Composite Index added 1.6 percent to 2,473.41. Benchmarks in Singapore, Taiwan, Indonesia and Thailand were also higher.
Benchmark crude for December delivery was down $1.32 at $92.60 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude was down $1.14 at $110.94 a barrel on the ICE Futures Exchange in London.
Pamela Sampson contributed to this report from Bangkok.
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