(Reuters) The euro turned lower after an initial jump and European stocks fell Tuesday after a long-awaited agreement on a second bailout for Greece removed the threat of a disorderly bond default but left markets fearful of further problems ahead.

The broad FTSEurofirst index .FTEU3 of top European companies was down 0.6 percent after touching seven-month highs Monday, although U.S. stock index futures pointed to gains when markets reopen after the Presidents Day holiday.

The euro was down 0.2 percent at $1.3220, after initially jumping more than half a cent against the U.S. dollar, to a two-week high of $1.3293, on relief over the Greek deal.

The news of the Greece deal was reassuring and welcome but not enough to take the euro out of its recent range, Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank said.

The market will remain skeptical about implementation.

After 13 hours of talks, euro zone ministers finalized a 130-billion-euro ($172 billion) deal for Greece in the early hours of Tuesday morning by forcing Athens to commit to unpopular budget cutbacks and private bondholders to accept deeper losses on their holdings.

While the deal averts a default by Greece next month, which potentially could have disrupted financial markets worldwide, it has left major doubts over the prospects for implementation given looming elections in April and rising social unrest on the streets of Athens.

Greece is increasingly trapped in a vicious circle where ever more austerity comes with an ever higher price tag on growth. Consequently, implementation risk will remain high, analysts at French bank Societe Generale said in a note.

Yields on Spanish and Italian bonds, seen as a gauge of risk for other peripheral euro zone nations, fell slightly on relief that Athens had at least sealed a bailout deal, but Portugal's debt came under pressure on fears it could be the next in line after Greece.

We are concerned that the Greece deal will act, via its restructuring, as a template rather than a one-off solution, and the market will speculate that Portugal is set to go down the same route, McGuire said.

The yield on 10-year Italian debt fell two basis points to 5.42 percent while 10-year Portuguese bonds yields were little changed at 12.42 percent.

However, Spain was able to sell new short-term debt on Tuesday at the lowest cost in over two years in the first test of appetite for debt issued by a country at the fringes of the euro zone since the deal for Greece was agreed.

RISK ASSET RALLY HALTED

Reaction in the share and commodity markets was also muted after rallies in recent sessions in anticipation of the Greek rescue deal, and as easier monetary policy stances from the world's major central banks have boosted demand for risk assets.

The bailout bandage is on, but it won't take much to unravel, said David Miller, a partner at Cheviot Asset Management.

The lack of economic growth in peripheral Europe and structural imbalances are slowly being mixed into the crisis.

The MSCI world equity index .MIWD00000PUS slipped by 0.4 percent after the Greek bailout but is still over 10 percent higher for the year to date.

Until we can see a path to growth (in Greece), there will be a draining away of the confidence that was coming back into the market. People will take a defensive posture in terms of stocks, said Justin Urquhart Stewart, director at Seven Investment Management.

The commodity-linked Australian dollar fell 0.7 percent to $1.068 after the Greek deal was sealed, and gold inched up 0.3 percent to $1,739, after touching a one-week high of $1,740.49.

Gold has drifted between $1,700 and $1,750 in the past two weeks, following the ups and downs in Greece's struggle to secure its bailout package.

Brent crude oil was steady at around $120 a barrel though U.S. crude was slightly higher at $104.87 as potential supply disruptions and demand from a recovering U.S. economy supported prices.