Greece Backs Down, Europe Exhales...for Now

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What's happening: Earlier this week, Greek Prime Minister George Papandreou scared the pants off the world by announcing a referendum vote on the latest bailout for his country. Today, he backed off the idea, while resisting calls to step down.

In plain English, please: The plan for the referendum vote was extremely worrisome for European leaders; if it didn't pass then the result would look like a disorderly default by Greece and, potentially, lead to the country's exit from the euro currency. The financial turmoil from that would have been a serious problem for the rest of the Eurozone, particularly Italy, Ireland, Spain, and Portugal, who are dealing with their own debt issues.

Papandreou's about face came after attending an emergency summit in Cannes, France, where understandably ticked-off leaders from Germany and France put on their bullying caps and told the Greek leader that the vote would determine whether Greece stayed in the euro -- a membership that is important to most Greeks. They also said they'd hang onto the next chunk of bailout cash due to Greece until after the vote takes place.

Stocks to watch: It's almost hard to say what stocks to not watch based on these developments. However, European banks, as well as U.S. banks that have concerned investors over European exposure, may be particularly worth keeping an eye on in light of this. That list would include National Bank of Greece (NYS: NBG) , Banco Santander (NYS: STD) , Barclays (NYS: BCS) , Morgan Stanley (NYS: MS) , and Jefferies (NYS: JEF) .

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At the time this article was published Motley Fool newsletter services have recommended buying shares of Jefferies Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer owns shares of Barclays, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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