Post date: Nov 22, 2010 3:37:7 PM
European stocks and the euro initially rose on news of a rescue deal for Ireland and its broken banks, but markets remained cautious waiting for details of the EU, IMF loans.
IRELAND-AID - More gloom on the streets of Dublin.
After a week saying they didn't need a bailout - Ireland finally gave in - earlier than expected.
The government's agreed to accept a three-year package from the European Union and the International Monetary Fund to rebuild its economy and its broken banks.
Dublin thinks lenders could transfer their assets to a "bad bank" - while financiers see more nationalisations on the horizon.
Irish Prime Minister Brian Cowen says the EU / IMF loans will amount to around 80 or 90 billion euros.
SOUNDBITE: Brian Cowen, Irish Prime Minister, saying (English):
"The Irish banks will become significantly smaller than they have been in the past so that they can gradually be brought to stand on their own two feet once more. The second key element of the agreement will be a program to reduce our budget deficit."
As widely hoped, news of the bailout boosted European markets like Germany's Dax when they opened on Monday morning.
Banking stocks were initially among the main gainers - and the euro also rose, says Robert Halver, a trader at Frankfurt's stock exchange.
SOUNDBITE: Robert Halver, Market analyst at Baader Bank, saying (English):
"It's good news ad hoc for the markets because there is no default of corporate bonds coming from Ireland or Portugal and that's why we European equity markets, especially in Germany, are very, very happy."
But that happiness didn't last long, as stocks gave up some of those gains and Ireland's index slipped into negative territory as the markets waited for more details about the loans.
The Irish rescue deal is of course designed to stop Dublin's problems spreading to the euro zone's most fragile economies.
Greece received the first euro zone bailout in May - and Portugal is seen as the next nation which might need help.
And so investors and analysts don't feel the euro is totally out of the woods just yet.
European and IMF officials now have to start thrashing out details of the loans - while the Irish government puts the finishing touches to its new 15 billion euro austerity plan.
That plan includes public spending cuts and some tax rises.
SOUNDBITE: Nuala Harman, Passer-by, saying (English):
"I have a young family and things are going to be tough. I think there's a lot of disappointment out there."
SOUNDBITE: Adrian Lamb, Passer-by, saying (English):
"Feel really let down, really let down. We put our trust in a so-called government and they let us down so badly. I mean, they should have done something a lot, lot sooner."
With or without a bailout there are tough times ahead for the Irish people - which could last several years.
Joanna Partridge, Reuters