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New debt deal 'buys Greece time'

Greece's Prime Minister has voiced relief at the new debt relief and bailout deal hammered out by European leaders.

In a televised address to the nation, George Papandreou said the 130 billion euro (£113 billion) package bought the country time to make a new start and would spare future generations of Greeks from a crippling burden.

Mr Papandreou said: "Tens of billions of euros have been removed from the backs of the Greek people. Banks will pay this cost, instead of citizens. But it is a fairer distribution of our debt burden."

But opposition parties criticised the landmark agreement, with conservatives warning it condemned the country to "nine more years of collapse and poverty".

The deal requires banks to take on 50% losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional 100 billion euro (£87 billion) in rescue loans as a second bailout package for Greece - on top of a 110 billion euro (£95.7 billion) package agreed last year.

World stock markets surged on the news but analysts were more cautious, noting that the deal remains vague and its success hangs on the details.

The strategy unveiled after 10 hours of negotiations includes a significant reduction in Greece's debts, a shoring up of the continent's banks, partially so they could sustain deeper losses on Greek bonds, and a reinforcement of a European bailout fund so it can serve as a 1.39 trillion euros (£1.2 trillion) firewall to prevent larger economies like Italy and Spain from being dragged into the crisis.

US President Barack Obama said the plan would have an impact on the US economy, but stopped short of saying whether it would be enough to prevent another global recession.

"If Europe is weak, if Europe is not growing, as our largest trading partner that's going to have an impact on our businesses and our ability to create jobs here in the United States," he said.

"The key now is to make sure that it is implemented fully and decisively and I have great confidence in the European leadership to make that happen."

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