European equities dived and the euro hit a new one-year low against the dollar, failing to win support after eurozone finance ministers agreed a 110 billion euro ($145 billion) Greek bail-out.

In late morning deals, the London stock market slid 1.51 per cent, Paris lost 2.04 per cent and Frankfurt shed 1.36 per cent. Elsewhere, Madrid tumbled 3.26 per cent and Athens slumped by 3.71 per cent.

In foreign exchange trade, the euro nose-dived to $1.3088, plumbing the lowest level since April 28, 2009.

“Markets do not seem greatly impressed by the launch of the Greek rescue plan,” said Unicredit analyst Marco Annunziata.
“The 110-billion-euro programme... barely met expectations, without generating any positive surprise, and this probably helps explain the lukewarm reaction.”

Over the weekend, eurozone finance chiefs approved an unprecedented three-year package of loans for Greece.

“The bail-out of Greece provides enough funding for the next 12 months or so,” said VTB Capital economist Neil MacKinnon.

“However, the ability and willingness to bail out another eurozone fiscal miscreant is politically difficult,” he added, hinting at other fiscally-challenged nations like Ireland, Spain and Portugal.

Other analysts also questioned whether the bail-out would be enough to allow Greece to raise its own private financing by 2011.

“After a closer examination of the Greek financials, the 110 billion euros on the table from the EU and IMF will not be sufficient unless private markets start lending again,” said Currencies Direct analyst Philip Ryan.