A man sells Greek flags to passing drivers - Greek bonds rise on news of bail-out deal Photo: GETTY IMAGES  European leaders and the IMF have agreed to be on standby to provide a bail-out should Greece struggle to raise sufficient funds from the financial markets. George Papandreou, the Greek prime minister, said he hoped his country would never have to make use of the aid.  "We hope we will never need to use it," he said. "But the fact is that there is a very positive signal from the EU. Europe is putting a seal of approval on our programme. We are ahead of schedule."  The agreement eased the pressure on Greek government debt, as the yield on 10-year bonds fell to a low of 6.21pc, compared with the week's peak of 6.67pc, where a lower yield reflects a higher price.  They outperformed benchmark German Bunds and the spread of Greek bonds over German Bunds fell to 306 basis points, the tightest in more than a week.  "The market is quickly pricing out any probability of default risk," said Petros Christodoulou, the head of Greece's debt agency.  Details of the deal were not disclosed but it is thought the deal could amount to about €22bn (£19.8bn) of support, with eurozone countries providing two thirds and the IMF providing the final third.  George Provopoulos, the Greek central bank's governor, also said assistance was unlikely to be needed. "The solution that was chosen seems to be a workable one which I think will not be used by Greece, because measures that have been announced will start to bear fruit soon," he said.  The IMF said only that it was "following developments closely" and repeated that it was ready to consider providing financial assistance if asked.  Colin Ellis, economist at Daiwa Capital Markets Europe, said he expected the Greek government to bring another new bond to the market in the near future, estimating the country still needs up to €15bn to meet its financing requirements in April and May.  "Under the terms of the support package it has to try to raise the money from financial markets first, before any aid is forthcoming. As such, the next bond issue will be a key test of confidence – and while the market is likely to remain cautious, on balance we expect Greece to successfully raise the funds it needs," Mr Ellis said.  "But, even if future bond sales go badly and the support package is eventually drawn upon, last night's agreement reinforces our view that – one way or another – Greece will not be allowed to default on its debts."  Developments in Greece helped to push the euro higher against sterling, although it was little changed at 89.89p when the market closed.
Greek bond prices rose as investors welcomed the decision by eurozone leaders    and the International Monetary Fund to offer the stricken economy emergency    support.