The interest rate which Greece has to pay to borrow money fell sharply yesterday after an EU safety net was agreed for the country and a helping hand came from the European Central Bank, traders said.

But the rate other members of the eurozone, notably Germany and France, must offer to attract funds rose, implying an increase in the cost of funding for their own considerable borrowing requirements.

The yield, or interest rate, on Greek 10-year bonds fell to 6.189 per cent early yesterday from 6.246 per cent late on Thursday when it had already fallen sharply after the ECB extended special relaxed lending conditions beyond the end of this year, helping Greek banks get access to funding.

The yield late on Wednesday had been 6.352 per cent.

The yield on the eurozone benchmark German 10-year bond, the Bund, rose yesterday to 3.154 per cent from 3.133 per cent late on Thursday, and the yield on the main French bond rose to 3.472 per cent from 3.463 per cent.

Analysts at BNP Paribas bank commented: "The announcement of an agreement between France and Germany and the announcement of a statement approved by EU states, mostly involving Europe but also the IMF, was good news for Greek government bonds but added weight on core eurozone government bonds."

This was a reference to the market view that while the risk surrounding Greek bonds has eased, because other eurozone governments have increased their exposure to possibly providing help, the risk on their bonds has risen slightly.

"The agreement involving the IMF may be good news for Greece in the near term but bad news for EMU (economic and monetary union) in the medium term," BNP Paribas said.

"The inability of European authorities to find a European solution to a problem that concerns 2.5 per cent of EMU GDP (gross domestic product) can weaken the euro area."

Referring to the rise of bond yields in other eurozone countries, the result of a fall in their bond prices, the analysts said: "Core markets could (slide) even further."