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Video: Greeks finalise cuts agreement in bid for immediate €12bn in loans

The Greek government has secured a parliamentary majority to implement severe cuts that will lead to an immediate €12bn in EU/IMF loans after initial legislation was passed on Wednesday.

Athens's latest efforts to tackle its debt crisis has staved off threats of an immediate debt default and also helped remove some uncertainty in global markets.

Just ahead of the vote, Germany’s biggest banks rolled in behind a similar move by France earlier this week by agreeing on a draft proposal to roll over Greek debt holdings into the future.

The euro had hit three-week highs and world stocks gained in anticipation of the result which made a Greek default look less likely - at least in the short term.

In addition, expectations of another euro zone rate rise next week, boosted by comments from European Central Bank President Jean-Claude Trichet, also supported the euro.

However, investors will be monitoring whether Greece can actually implement the planned €28bn in cuts, which includes selling state assets and raising taxes.

Markets are still pricing in an 80pc chance of Greece defaulting on its €340bn debt pile within five years.

As a result, Greece's 10-year government bond yields rose 6.6 basis points to 16.6pc, although that’s less than the peak of 18.9pc hit two weeks ago.

European leaders endorsed the Greek decision.

“This was the second, decisive step Greece needed to take in order to return to a sustainable path. In very difficult circumstances, it was another act of national responsibility,” European Commission President Jose Manuel Barosso and head of the European Council Herman Van Rompuy said in a joint statement.

“The conditions are now in place for a decision on the disbursement of the next tranche of financial assistance for Greece and for rapid progress on a second assistance package.”