Markets reacted cautiously Tuesday to the news that Greece finally secured its second massive bailout in less than two years, which is aimed at giving the debt-ridden country the breathing room to enact widespread economic reforms and set it back on the path to growth and prosperity.
That is the most optimistic hope in Europe's capitals but with many hurdles still to be cleared and the country still lumbered with massive amounts of debt even after its private creditors agreed to a huge writedown of debt, the prevailing view in the markets is that Greece remains insolvent and that its debt crisis still has a few more chapters to run.
"This deal clearly does not solve Greece's problems or that of the rest of the eurozone. What it does do is buy some time," said Louise Cooper, markets analyst at BGC Partners. "This deal does not rule out a breakup of the eurozone. It does not rule out a Greek default in the future, it does not prevent contagion and does not help the wider eurozone indebtedness problem."
The heart of the deal that emerged after 12 hours or so of wrangling in Brussels is that Greece's partners in the 17-country eurozone have agreed to hand over another euro130 billion ($170 billion) to the country in the hope that it will avoid a potentially disastrous default as soon as next month, and secure the euro currency.
On top of the new rescue loans, Athens will also ask banks and other investment funds to forgive it some euro107 billion ($142 billion) in debt, while the European Central Bank and national central banks in the eurozone will forgo profits on their holdings.
However, the pieces of the jigsaw have yet to be put in place and many in the markets think that there will be more high-wire acts in the Greek debt drama. Perhaps most important of all will be Greek elections, due in April, which will take place at a time when the country's economy is in freefall and unemployment is standing at a record rate above 20 percent.
With the parties of the governing coalition struggling to get a combined 30 percent in opinion polls, there are real fears in the markets that anti-bailout forces may win the day, or at least hold the balance of power.
"With the recession thwarting debt reduction efforts and public outrage growing, we still see Greece leaving the eurozone before the year is out," said Jennifer McKeown, senior European economist at Capital Economics.
Over recent days, stocks have rallied in the hope that a deal would be secured and that Greece would avoid defaulting on its debts in a disorderly fashion that could hobble a tentative improvement in the global economy.
The eurozone _ and Greece _ had been under pressure to reach an accord quickly to prevent Athens from defaulting on a euro14.5 billion ($19.2 billion) bond payment on March 20. The fear has been that an uncontrolled bankruptcy even of relatively small Greece could unleash market panic across the rest of the continent. That would further unsettle other struggling countries like Ireland, Portugal or the much bigger Italy or Spain.
Despite the promise of new rescue loans, which come on top of a euro110 billion ($146 billion) bailout granted in 2010, the other 16 euro countries made clear that their trust in Greece is running low. Before Athens will see any new funds, it has to put into practice a whole range of previously promised cuts and reforms.
With the deal agreed, many investors took profits on the gains they have mustered over recent days.
In Europe, the FTSE 100 index of leading British shares was down 0.4 percent at 5,919 while the CAC-40 in France fell 0.9 percent to 3,441. Germany's DAX was 0.8 percent lower at 3,890.
The euro was faring slightly better, trading 0.2 percent higher on the day at $1.3230.
Wall Street was poised for a modest advance later as it returns from a long holiday weekend _ Dow futures were up 0.3 percent at 12,969 while the broader Standard & Poor's 500 futures rose 0.2 percent to 1,363.
Earlier, Asian shares were mixed as they awaited the developments in Brussels.
Japan's Nikkei 225 index closed down 0.2 percent at 9,463.02 while Hong Kong's Hang Seng rose 0.3 percent to 21,478.72
In the oil markets, the attention was as much on Iran as on Greece. Earlier, Iran has laid out conditions for future oil exports to European countries after halting sales to Britain and France earlier this week.
Benchmark crude was up $1.49 to $104.73 a barrel in electronic trading on the New York Mercantile Exchange.
Pamela Sampson in Bangkok contributed to this report.