Lack of detail in EU's Greek bailout quells City euphoria

Shares and the euro advanced to start with, but in the following hours those gains sharply reversed with New York stocks falling as Wall Street opened and investors reacted to the lack of real, concrete aid measures.

The major European stock markets were all between 1% and 2% down by the afternoon although the FTSE 100 index managed to fend off the losses.

Analysts said the sketchy nature of the details of the bailout meant it was too soon to bet on the crisis being over for the indebted country or other eurozone weaklings such as Spain and Portugal. EU leaders were expected to make a fuller statement this evening but sources said the final shape of a deal would not be decided until next week.

Angela Merkel, the German Chancellor, said: "Greece is part of the European Union. Greece will not be left on its own but there are rules and these rules must be adhered to, and on this basis we will agree a statement."

The apparent deal came much earlier than expected. The EU president, Herman Van Rompuy, said the region would "take co-ordinated action to ensure the stability of the euro area".

He said he "fully supports" Greek prime minister George Papandreou's austerity plan to cut the country's disastrous debts, currently running at more than 12% of GDP. Van Rompuy urged the Greek government to cut that by four percentage points in 2010.

The EU is keen to show it is not bailing out a member state without insisting on tough measures in return.

David Buik, partner at brokers BGC, said: "Unless there is shown to be total support not only for Greece but for all other countries in the eurozone, then the speculators will be after the euro again like rats up drainpipes."

The bailout is unprecedented, as Greece becomes the first country in the eurozone to receive aid. European leaders have been keen to avoid openly speaking about an aid package as they want to keep ratcheting up the pressure on Greece to push through proposals to slash its public spending.

Peter Jankovskis, co-chief investment officer at OakBrook Investments was among those unimpressed by the European action: "The EU news on Greece wasn't all that outstanding. There wasn't a firm plan announced. I'd put that in the jaw-boning category."

Analysts said world shares would have fallen further were it not for positive news on the American jobs market.