ATHENS/LONDON (Reuters) - Greek equities lost ground on Monday after Syriza's election victory and yields on government paper edged higher as attention turned to the formation of a new cabinet and implementation of the country's third bailout.
In Sunday's poll, voters gave Alexis Tsipras and his left-wing party a second chance to steer a battered economy to recovery, despite his dramatic U-turn over the international bailout.
Greek stocks, down 15.6 percent year-to-date, had staged a nearly 22 percent rebound leading up to the vote after hitting a low at 568 points on Aug. 24.
The Athens bourse's benchmark share index traded 0.14 percent lower, erasing early losses of more than 1.0 percent, with bank shares underperforming, down 1.4 percent.
The yield on 10-year Greek government bonds was up two basis points at 8.27 percent.
"The market had pretty much discounted a Syriza win and there is some profit-taking, but prices are attractive," said fund manager Costis Morianos, head of Athens-based Asset Wise Capital Management.
Syriza said on Sunday it planned to govern in coalition with the small right-wing Independent Greeks party, the partner Tsipras chose after winning the country's last general election in January.
Analysts see risks that the tough reforms demanded by Greece's bailout programme will not be fully implemented, because of the low appetite for them among the public and in Syriza itself.
"Markets want to see a strong cabinet that will undertake to implement reforms under the programme and political stability," Morianos said.
Greek 10-year yields have come down sharply after hitting a high of 19.3 percent in early July before Tsipras' showdown with the euro zone was eventually resolved with a third rescue package.
"Bailout implementation within the short targeted timeframe remains arduous in our view," Citi analyst Giada Giani said in a note.
"The third programme is unlikely to solve Greece’s structural problems and hence we still believe that Greece’s position within the euro area will be questioned again over the next few quarters."
(Editing by Jeremy Gaunt and Andrew Roche)
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