Greek bankruptcy averted after international creditors release loan payments

ATHENS (AP) - Greece has avoided imminent bankruptcy after its international creditors finally agreed to give it the money it urgently needs but the cash-strapped country's economic distress is likely to drag on for years to come.

After three weeks of negotiations, Greece's euro partners and the International Monetary Fund (IMF) agreed to release vital loan payments totaling some 44 billion euros (S$69.8 billion) and introduce a series of measures designed to reduce the country's massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a bond buyback programme.

Greek Prime Minister Antonis Samaras hailed the agreement in Brussels early on Tuesday as a victory that heralds "a new day for all Greeks," but the reaction in the markets was a bit more cautious.

Most stock markets in Europe were modestly higher. The Stoxx 50 index of leading European shares was up 0.4 per cent, but the main stock index in Athens fell 1.4 per cent as investors had hoped for some more debt relief for the country. The euro also gave up earlier gains to trade 0.4 per cent lower at US$1.2947 (S$1.58).