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European shares were seen opening flat on Tuesday after euro zone finance chiefs agreed to give Spain an extra year to cut its budget deficit to 3 percent, while European Central Bank (ECB) President Mario Draghi left the door open to a further cut in euro zone interest rates if economic conditions worsened.
The FTSE was called to open 6 points higher at 5632, the DAX was seen lower by 2 points at 6385, while the CAC40 was expected to open 4 points higher at 3161.
A meeting in Brussels of euro zone financechiefs on Monday agreed to allow Spain more time to get its budget deficit under control by extending a previously agreed deadline by one year to 2014.
The move came after Spanish bond yields spiked earlier in the day as fears Spain would need a full sovereign bailout continued to weigh on market sentiment. A bailout loan for Spain’s banks, which have been crippled by bad debts stemming from the collapse of the country’s housing market, will be signed on or around July 20.
The size of the bailout fund has still to be finalized with some 100 billion euros available to Spain’s banks, but 30 billion euros will be available could be accessed by the end of the month if there was an urgent need.
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