Euro debt deal: Reaction

Reaction to news European leaders have struck a deal to ease the region's debt crisis has been mixed...

As part of the deal, private banks holding Greek debt have accepted a 50% loss, while the eurozone bailout fund has been increased from 440bn euros to 1trn euros. Additionally, banks have been told to recapitalise to the tune of 106bn euros.

Here are some of the key quotes following news of the deal:

Chancellor George Osborne

"We are in a much better place this morning than we were yesterday afternoon. But we have now got to have the details filled in.

"The thing is to maintain the momentum - back in July there was an agreement but it took months to put into place. The eurozone leaders have grasped the seriousness of the situation."

German Chancellor Angela Merkel

"The world's attention was on these talks today. We Europeans showed tonight that we reached the right conclusions."

Robert Peston, BBC business editor

"Eurozone leaders have delivered more than investors feared they would only last night, and less than they would ideally like to see. Although markets reacted positively to the news, ideally investors would like to see bailout resources of at least €2trn and a Greek write-off of 60%.

"The other vitally important point is that what we have - on the expansion or "leveraging" of the bailout fund and the reduction of Greek debt - is a statement of what eurozone leaders wish to achieve. All the technical implementation, which will be messy and complicated, is yet to come."

Dominic Rossi, global CIO, equities, Fidelity Worldwide Investment

"Recapitalising banks is a step in the right direction. The decision to give banks until June 2012 is sensible. It allows banks to sell assets rather than just go directly to public markets, which would prove difficult. The sanctions on bank dividends and bonuses should ensure this gets done.

"The €106bn in fresh capital will ensure a new minimum of 9% Tier 1 capital ratio for euro area banks. I believe stronger banks will strive to be well above this level. The impact on growth in the short-term will be a negative as the deleveraging process continues, but a better capitalised banking system has got to be good in the long-term.

"The 50% Greek write-down is an important step forward, although I would like to see more details. The Greek write-down sets a watermark for other European countries. How does Italy look on this basis? The eye of the storm will now move to Rome and its fragile government. I do not think yields on Italian debt will fall on the back of this agreement for long.

"There have also been proposals to leverage the EFSF ‘four or five' times. Unless the fund has a sound equity base I think it is a heroic piece of financial alchemy. Its effectively an insurance company selling protection against its own default. You can understand why the insurance company would want to sell it but it is yet to be seen whether the Chinese would want to underwrite it.

"My overall view is the deal is not the game changer. Italy's 120% debt-to-GDP does not look any more sustainable today than yesterday.

"Europe is destined for a multi-year workout during where economic growth will be very restrained and equities will remain cheap.

"The path of equities will therefore require better news elsewhere. Earnings growth in the US continues to surprise on the upside and we may be approaching a policy shift in China. The catalyst for higher equity values lies outside Europe rather than within."

Sony Kapoor, managing director, Re-Define (economic think tank)

"EU leaders needed to pull a rabbit out of the hat. They failed to do so. This is no ‘comprehensive deal’” “The numbers are too small, the timelines too long and details too thin on the ground. An invitation to agree to a haircut is not the same as a haircut.”

Greek Prime Minister George Papandreou

"We can claim that a new day has come for Greece, and not only for Greece but also for Europe."

European Commission president Jose Manuel Barroso

"These are exceptional measures for exceptional times. Europe must never again find itself in this situation. That is why we must further improve our economic governance, namely in the euro area: the euro summit paves the way to a further strengthening of co-ordination and surveillance [of eurozone economies]."

Michael Hewson, market analyst, CMC Markets

"The question is whether it will be enough in the long term, or whether it has merely put off the day of reckoning, for a little while longer. While we now have some numbers to go on it will be all rather pointless of leaders don't find a way to stimulate growth and we still have the question of Italy's finances."