The Greek parliament was set to approve detailed austerity and privatisation bills on Thursday to secure emergency funds and pull the euro zone country back from imminent bankruptcy, but longer-term dangers still lurk.
The euro and global stocks rose after Wednesday's first vote to adopt a five-year austerity plan despite fierce public opposition to more pay and spending cuts, as investors expressed relief at averting an immediate meltdown.
But credit insurance markets are still pricing in an 80% chance of Greece defaulting on its 340 billion euro debt mountain -- 150% of annual economic output -- within five years, and a likely 40% write-down for bondholders on three-year debt.
Prime Minister George Papandreou's shell-shocked socialist government may find it hard to enforce tax increases and state asset sales against massive public resistance, while a violent fringe always present in Greek politics has burst to the fore.
Rioters armed with stones and clubs fought several hours of running battles with police firing huge clouds of teargas in central Athens until the early hours of the morning, leaving a field of debris for street cleaners to clear.
"The implementation law will pass without problems," said Costas Panagopoulos, head of ALCO pollsters.
"The problem for Papandreou is not in parliament, it is what is happening outside parliament: not in Syntagma Square, which is just a few hundred protesters, but with the whole of Greece's 11 million people."
Assuming parliament endorses the implementation laws, euro zone finance ministers are set to agree at an emergency meeting on Sunday to release the next tranche of aid for Athens, followed by the International Monetary Fund on July 5.
That 12 billion euro loan will prevent Greece defaulting in mid-July or at the latest on Aug. 20, when it must honour a big bond redemption, and shift the focus to a second assistance package likely to be about the same size as last year's 110 billion euro bailout.
North European creditor countries, led by chief paymaster Germany, are insisting that private sector bondholders must share the cost of any further rescue, so intensive talks are under way on a "voluntary" rollover of maturing Greek debt.
German bankers were due to discuss a French rollover plan that has drawn widespread interest with finance ministry officials on Thursday, but differences remain over incentives for private investors and possible official guarantees.
European Central Bank President Jean-Claude Trichet, who has repeatedly warned the EU against triggering a devastating credit event or downgrade of Greek debt, gave a cautious response to the French proposal in testimony in the European Parliament.
"At this stage we have not yet (got) a position... we are very alert but I cannot give you a precise judgment on what is going on. There are several concepts being examined," he said.
"We advise against all concepts that are not purely voluntary," Trichet said.
Three banking sources told Reuters on Wednesday that politicians and bankers were confident that implementing the French plan would not trigger a payout of credit insurance or a default that would inflict losses on banks.
Banks had received positive signals from ratings agencies that they would not call the rollover plan a default, the sources said.
But officials cautioned that many details of the plan, including whether there would be any official guarantee, remained to be negotiated.
Another ECB policymaker, Ewald Nowotny of Austria, called the French proposal "a very interesting step" that was important for winning political support in countries such as Germany.
As Athens recovered from a night of violence, market concerns shifted from the danger of an immediate disorderly default for the first time in the euro zone to the medium-term prospect of a Greek debt restructuring.
"There's still implementation risk over the next few months but for now the default risk has been taken off the table so long as today's vote goes through," said Lloyds Bank strategist Eric Wand.
He forecast renewed pressure on the bonds of weaker euro zone countries on the edges of the single currency area after a temporary respite.
"There should be a brief hiatus in the periphery-bashing we've had in the last few weeks, but there are other problems."
Those included the prospect of early Spanish elections and squabbling within Italy's centre-right coalition as the country faces a credit rating downgrade.
Italy's cabinet is due to adopt on Thursday a more ambitious deficit reduction plan than initially planned aimed at saving 47 billion euros by 2014 to try to ward off a loss of creditworthiness.
But Prime Minister Silvio Berlusconi's Northern League coalition partners have said the government is at risk over plans to raise the retirement age and cut spending.