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Deal means there is no Grexit

Markets steady as EU leaders reach deal with Greece

GreeceMon close: Greece has secured progress on a third bail-out in exchange for tough conditions that have to be hammered out over the next three days.

If agreed, a deal will avoid a “Grexit” and bring some certainty and stability to nervous markets.

European council president Donald Tusk unveiled the deal this morning. He said: “Euro summit has unanimously reached agreement. All ready to go for ESM [European Stability Mechanism] programme for Greece with serious reforms and financial support.”

However, the agreement, reached after 17 years, could bring down Prime Minister Alexis Tsipras’ left wing government. It could cause a backlash in Greece where the public voted overwhelmingly against further austerity in last week’s referendum called by Mr Tsipras.

Ahead of the final terms being announced, his labour minister went on state television to denounce the terms.

Greece is expected to pass reforms demanded by the eurozone by Wednesday.

Eurozone leaders had been meeting in Brussels for about 17 hours, with talks continuing through the night.

Shares across European markets rose on the news. The FTSE100 closed up  64.57 points at 6737.95 48. Markets in France and Germany rose by 2% and 3% respectively.

However, there was an air of caution, given the work that is required by the Greek government and potential pitfalls still lying ahead.

Martin Gilbert, chief executive of Aberdeen Asset Management, tweeted: “Even if Greece’s MPs vote for this loss of sov/privatisation fund what has been agreed isn’t a long-term solution. More work to be done!”

International Consolidated Airlines Group was the standout gainer after Swiss bank UBS upped its rating on the stock to ‘buy’ from ‘neutral’ and raised the price target to 700p from 580p.

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