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Investors left unimpressed by Greek debt agreement

posted 21 Feb 2012, 01:52 by Mpelembe   [ updated 21 Feb 2012, 01:53 ]

Even the festive carnival period fails to inspire investors in Germany as the DAX index falls despite a deal on Greek debt.

Shares on Germany's DAX index fell on Tuesday (February 21) after hitting seven-month highs a day earlier, with investors focusing on the state of the Greek economy and likely hurdles after the euro zone approved a second bailout for the debt-laden country.
At 0844GMT the DAX was down 0.27 percent at 6929 points.

Traders in Frankfurt, many of whom were dressed up for the annual carnival festival, said that despite the latest agreement, there was still no reason to celebrate.

"The situation around Greece is that the markets were already expecting a solution in Greece. So far some of the investors are thinking that this is the end of the rally. On the other hand, we can see some rising in the spreads of Portuguese bonds and therefore we are a little bit concerned about a second Greece in Portugal," Oliver Roth from Close Brothers Seydler told Reuters TV.

After 13 hours of talks, euro zone ministers finalised measures to cut Greece's debt to 120.5 percent of gross domestic product by 2020, a fraction above their original target of 120, after negotiators for private bondholders accepted bigger losses to help plug the funding gap.

This is the country's second rescue in less than two years.

A report prepared by experts from the European Union, European Central Bank and International Monetary Fund said if Athens did not follow through on economic reforms and savings, its debt could hit 160 percent by 2020.