GLOBAL MARKETS-Greek debt deal sends shares higher but caution remains
* European shares rise 0.4 pct on Greek debt deal * Euro falls after hitting one-month high * German government bond futures dip * Wall Street expected to see steady open By Marc Jones LONDON, Nov 27 (Reuters) - World shares climbed to near a three-week high and safe haven German bonds fell on Tuesday, after global lenders agreed a new deal to reduce Greek debt and release loans needed to keep the country afloat. After 12 hours of talks, they decided on steps to cut Greek debt to 124 percent of gross domestic product by 2020, and promised further measures to lower it below 110 percent in 2022. Following months of jockeying, the deal was broadly expected by markets and clears the way for Greece's euro zone neighbours and the International Monetary Fund to disburse almost 35 billion euros of aid next month. European shares on the FTSEurofirst 300 index were up 0.4 percent by 1405 GMT following the deal, with London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX between 0.3 and 0.5 percent higher. . The MSCI index of global stocks was up 0.2 percent and U.S. futures prices pointed to a steady open on Wall Street when trading resumes. "After three meetings this months and a total of more than 24 hours of discussing and negotiating, the euro zone countries have put their money where their mouth is," said ING economist Carsten Brzeski. "The political will to reward the Greek austerity and reform measures has already been there for a while. Now, this political will has finally been supplemented by financial support." With doubts about Greece's ability to hit its growth and debt cutting targets, few analysts expect the latest agreement to be the final chapter in the euro zone's three-year crisis. The worries tempered the optimism of investors. The euro hit $1.3010 in Asian trading, its highest level since Oct. 31, but lost momentum as caution set back in and was down 0.35 at 1.2940 by mid afternoon in Europe. Also underscoring the concerns, the OECD slashed its global growth forecasts on Tuesday, saying the euro zone's troubles were the greatest threat to the world economy. "While the EU/IMF agreement on Greece is EUR-supportive, it was widely expected and hence the market reaction is likely to remain muted. We maintain our buy on dips strategy," Morgan Stanley's FX strategy team wrote in a note to clients. Michael Hintze, founder and CEO of hedge fund CQS, told a Reuters summit he expected the euro zone to continue muddling through its troubles, but added that "the chances of misstepping on the way through are pretty high." SAFE HAVEN SAG Elsewhere on the currency markets, the dollar was broadly flat against a basket of key currencies, while the yen slipped after Japan's opposition leader and likely next prime minister reiterated calls for bolder monetary and fiscal stimulus. Safe haven German government bonds fell following the Greek deal, with benchmark Bunds down 35 ticks at 142.09 as ten-year Greek yields steadied near lows last seen when the country's debt was restructured in March. "Too much (of the deal) has been anticipated, It's not a real game-changer. We expect some upside pressure on Bund yields but not a sustained sell-off," said Michael Leister, a senior rate strategist at Commerzbank. "(The Greek deal) is not the green light for a sustained rally for risk assets across the board. As we've seen before, once the market starts scrutinising some of the details some doubts may well arise," he added. The Greek agreement helped copper to a three-week high of $7,791.50 a tonne while oil gave up early gains to stand just under $111 a barrel as optimism was countered by worries over looming tough U.S. fiscal decisions. After an initial post-Greek deal jump, gold steadied before being pushed lower to $1,746.39 an ounce by comments from Federal Reserve hawk Richard Fisher who voiced caution about U.S. monetary stimulus. U.S. FOCUS In Asian trading, MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent to a near three-week high, led by a 1 percent advance in Korean shares and a 0.7 percent rise in Australian shares . Indian shares jumped 1.2 percent. Shanghai shares bucked the trend to fall 1 percent to their lowest since 2009, dragged by weakness in growth-sensitive companies. U.S. stock index futures pointed to a steady open on Wall Street with investors fixed largely on talks between the Obama administration and Congress to avert a series of spending cuts and tax increases scheduled to begin next year, which threaten to drag the economy into recession. A gauge of planned U.S. business spending increased by the most in five months in October, data ahead of the open showed, but a fourth straight month of declines in shipments underscored the damage that fears of tighter fiscal policy next year are inflicting on the economy. "Advancing volume trends have failed to surge during the S&P 500's 4 percent bounce from its Nov. 16 low, suggesting recent strength can be attributed to a lack of selling pressure rather than fresh buying demand," said Ari Wald, analyst at the PrinceRidge Group in New York. "We would like to see this spread turn positive to confirm an upward S&P 500 reversal."
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