LONDON (AP) — Markets were shored up by the news that Greece's party leaders agreed a deal on new cuts that are necessary for the country to get crucial bailout funds.
Greece needs the €130 billion ($172 billion) of bailout money and a €100 billion reduction of its private sector debt to avoid defaulting on its debts next month when a big bond repayment is due — a scenario that could send shock waves all round the European economy.
That unappetizing prospect appears to have subsided after the office of Prime Minister Lucas Papademos' office said negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund have been successfully concluded.
A statement from Papademos' office Thursday said leaders of the parties in the coalition government have accepted the result of talks with the three organizations, collectively known as the troika.
Following confirmation that a deal has been agreed, stock markets, the euro and oil prices rose. Though the prevailing view has for weeks been that Greece would get its bailout, there was still an element of doubt especially as the talks dragged on for days longer than anticipated.
"From perspective of austerity measures, it's good news that we have an agreement but we are not out of the woods yet," said Simon Derrick, an analyst at Bank of New York Mellon.
In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 5,895 while Germany's DAX rose 0.6 percent to 6,788. The CAC-40 in France was 0.4 percent higher at 3,424.
The euro was trading up 0.4 percent at $1.3286, just shy of its earlier two-month high of $1.3313.
In the U.S., the Dow Jones industrial average was up 0.17 percent at 12,906 while the broader S&P 500 index rose 0.2 percent to 1,353.
A Greek deal had appeared to be imminent in the early hours of Thursday following marathon talks but the leaders of the three political parties supporting the government led by Prime Minister Lucas Papademos failed to accept the entire batch of new harsh austerity measures demanded by creditors. The talks stalled after the leaders balked at creditors' demands to make €300 million ($398 million) in pension cuts.
The attention over the rest of the day will likely remain on Greece as details of the agreement emerge and as finance ministers from the eurozone gather in Brussels to discuss developments.
Greece also dominated the monthly press conference from Mario Draghi, the president of the European Central Bank, after the bank kept its interest change unchanged at 1 percent.
Draghi gave a broad hint that the bank may help out in the Greek bailout by indicating that the bank could distribute any profits it makes on its Greek bond holdings to member governments. That may leave open a legal door for it to help lighten Greece's debt load.
Some officials have said the ECB should contribute to a new bailout package for Greece by forgoing profits on its Greek bondholdings. It holds an estimated €55 billion in face value but bought them for around €40 billion.
The Bank of England was also in focus after it announced its intention to pump another 50 billion pounds ($79 billion) into the ailing British economy while keeping its own main interest rate at the record low of 0.5 percent.
The hope is that by increasing the amount of money in the financial system the purchases, known as quantitative easing or QE, will loosen credit for businesses and raise asset prices. Quantitative easing can be inflationary, but analysts say the bank has room to act.
Earlier, Asian shares were muted by Chinese inflation figures showed consumer prices rose 4.5 percent in January over a year earlier, up from the previous month's 4.1 percent. The People's Bank of China eased lending curbs in December to promote growth in the slowing economy but the unexpected jump in the cost of living could make the central bank wary of carrying out further steps to loosen credit.
On mainland China, the benchmark Shanghai Composite Index gained 0.1 percent to 2,349.59. The Shenzhen Composite Index gained 0.6 percent to 898.89.
Japan's Nikkei 225 index closed down 0.2 percent to 9,002.24 while South Korea's Kospi rose 0.5 percent to 2,014.62. Hong Kong's Hang Seng slipped marginally to 20,010.01
Oil markets rallied as news filtered through of the agreement in Athens, which should help ease concerns about the immediate prospect of a Greek default — benchmark oil for March delivery was up 97 cents to $99.69 a barrel in electronic trading on the New York Mercantile Exchange.