GLOBAL MARKETS: European Stocks Down; Cautious About Greek Deal

--European stocks down, losses small as Greek details digested
--Euro rises against the dollar but investors feel second bailout not the last
--Peripheral 10-year government bond yields muted; banks stocks up for now


LONDON (Dow Jones)--European stocks fell into the red Tuesday and investors remained cautious, despite Greece managing to secure a rescue package totaling EUR130 billion.

Although Greece seems to be out of the woods for now, many investors are concerned that the general election, expected in April, may bring in a government unwilling or unable to implement stringent austerity measures.

In addition to this, the U.K.'s Financial Times reports that Greece may still need a third bailout as the forced austerity could cause debt levels to rise, and its debt restructure could prevent Greece from ever returning to financial markets.

"The crisis marathon is not over," warned Carsten Brzeski, economist at ING Bank NV. "The combination of more austerity, social unrest and European impatience could become explosive, with a high risk that the Greek crisis could still derail."

Brzeski added that the second bailout package has again bought time for other 'peripheral' euro-zone countries to show that they are different to Greece and to put all available "anti-contagion firewalls" into place.

The benchmark Stoxx Europe 600 index was down 0.1% at 267.82. London's FTSE 100 was 0.1% lower at 5940.80, Frankfurt's DAX was down 0.1% at 6938.10 and Paris's CAC-40 was also down 0.1% at 3469.35. Greece's ATHEX Composite index shed early gains and was down 1.7% at 811.33.

At this stage 10-year government bond yields have had a fairly muted reaction to the Greek deal. The Italian 10-year yield was down 6 basis points at 5.412%, Spain was 5.8 points lower at 5.086% and Portugal was up 1.10 points at 11.828%.

Investors in bank stocks seemed to be undecided about the Greek deal. The Stoxx Europe 600 banks index was up 0.6% at 160.90, though the index has been chugging up and down between small losses and gains throughout the early morning session. Investors are digesting details of the deal including plans for Greece's creditors to take a deeper write-down on the face value of privately-held Greek debt of 53.5%, to help bring the country's debt closer to sustainable levels. Originally, a 50% writedown had been expected.

Meanwhile, earnings and corporate news was relatively thin on the ground, but there were some company reports of note.

TNT Express released its fourth-quarter results, saying it will focus on its European business and seek partnerships for its loss-making operations in Brazil and China. The results follow an unsolicited offer from United Parcel Service Inc. On Monday, TNT shares soared above 60% in Amsterdam after the company rejected the EUR4.9 billion offer. The company said it was remaining in talks about a deal. TNT shares were 1.8% lower at 0900 GMT.

Elsewhere, Tullow Oil was down 3.8% and the biggest faller on London's FTSE 100 after its announcement that the Jupiter-1 exploration well offshore Sierra Leone has successfully encountered hydrocarbons. Analysts had concerns though that this discovery does not yet appear economic on a standalone basis and that more work is required to understand its commercial potential.

Earlier, Asian stock markets closed mostly up Tuesday. Australia's S&P/ASX 200 rose 0.8% after earlier touching a high of 4298.50. Japan's Nikkei Stock Average closed down 0.2%, South Korea's Kospi Composite lost 0.3%, China's Shanghai Composite Index finished flat and Hong Kong's Hang Seng Index gained 0.3%.

In foreign exchanges, the euro was up against the dollar, although trading was cautious. Commerzbank said scepticism was justified and added that even with the Greek bailout, the majority of market players are finding it hard to believe that Greece will get through to 2020 without a further default.

At 0900 GMT, the single currency was at $1.3275 against the dollar, from $1.3240 late Monday in New York. The dollar was at Y79.78, from Y79.64.

Elsewhere spot gold was at $1,741.20 per troy ounce, up $7.45 from its previous settlement. April Nymex crude oil futures were at $105.31 per barrel, up $0.92 from the previous settlement and April Brent was up $0.08 at $120.13. The March bund was down 0.09 at 137.88, off opening lows.

The economic calendar is fairly light Tuesday. U.K. public finance data for January are at 0930 GMT. Euro-zone consumer confidence is at 1500 GMT. U.S. markets will re-open on Tuesday following Monday's public holiday. Spain is due to sell EUR1.5 billion to 2.5 billion of T-bills at around 0930 GMT.