Asian stocks are trading mostly lower on Friday, as investors remain skeptical despite Greek political parties clinching a deal on economic reforms and spending cuts needed to secure a second international bailout.
Reports say that eurozone finance ministers have demanded a parliamentary seal of approval before providing the aid.
The MSCI Asia Pacific Index was down 0.8% as of 11:35 a.m. in Tokyo. The index posted its biggest monthly advance last month since September 2010. The MSCI Asia Pacific Index has rallied 17% from a two-year low in October.
The Nikkei in Japan was down ~0.2% at 8,984. The Shanghai Composite index in China was up 0.6% at 2,363. The Hang Seng in Hong Kong was down ~0.3% at 20,952.
The Straits Times in Singapore was up 0.3% at 2,990 while the Kospi in South Korea dropped ~0.8% at 1,998. The S&P/ASX 200 index in Australia lost ~0.5% to 4,261. The NZX index in New Zealand was up 0.7% at 3,350.
The agreement in Greece comes after weeks of wrangling over the terms of the €130bn bailout and removes the imminent risk of a messy default by the debt-plagued nation, which faces a major bond redemption on March 20.
"Despite the important progress achieved over the last days, we did not yet have all necessary elements on the table to take decisions today," Eurogroup President Jean-Claude Juncker said.
Greece's lawmakers are set to convene this weekend to begin voting on the austerity measures, Christos Protopapas, a spokesman for the Pasok socialist party, said yesterday.
The news on the Greek deal spurred a rally in Italian, Spanish and Belgian bonds on Thursday, pushing 10-year Italian yields down to levels seen in early October.
Separately, EU Economic and Monetary Affairs Commissioner Olli Rehn said that a debt swap deal between Greece and its private bond holders was practically finalised. It is reportedly expected to be approved as part of the wider funding package next week.
The European Central Bank (ECB) kept interest rates at a record low 1% on Thursday.
ECB President Mario Draghi was non-committal on whether the bank would participate in Greece's debt restructuring, although he indicated that the bank could pass profits from its Greek bond holdings to eurozone countries.
Concerns that Greece may be staring at a disorderly default has dampened investor confidence despite a strong rebound in equities this year.
The eurozone financial system is not yet seen to be in a position to deal with a disruptive Greek default and a possible European Monetary Union or European Union exit. Greece is set to pay a €14.5bn (US$19bn) bond due on March 20.
The euro has strengthened against 15 of its 16 most-traded currencies this week. The 17-nation shared currency is set to rise 0.9% against the dollar this week. It is poised for a 2.4% gain versus the yen, the most since the week through Oct. 14.
Australia’s dollar fell 0.4% after the central bank cut forecasts for growth and inflation this year. While Europe’s economy appears to be in recession, there has been a general improvement in sentiment in the past month, the Reserve Bank of Australia said.
The central bank said that it sees average economic growth of 3.5% in 2012, down from its Nov. 4 estimate of 4%. The outlook for consumer prices provides “scope for easier monetary policy should demand conditions weaken materially,” the RBA said in a statement today.