BRUSSELS, April 13 (Xinhua) -- European markets have given a cautious approval of the 30-billion-euro (41-billion-dollar) rescue package agreed by eurozone finance ministers for Greece at the weekend, but concerns over the long-term risks remained.

On the positive side, the Greek government passed its first borrowing test on Tuesday. Its auction of short-term treasury bills worth 1.2 billion euros were oversubscribed.

German Chancellor Angela Merkel hailed the positive development as a valuable piece of proof that an emergency aid mechanism for Greece is not needed at the moment.

However, the interest rate on the Greek government's six-month bill was more than three times that paid in January, while the rate on the one-year bill was two times more.

While the yield on benchmark Greek 10-year bond has fallen markedly from record highs above 7.5 percent which were seen last week, it remained at stress levels.

It is interesting to see that on Monday, which was the first trading day after the announcement of the detailed rescue package, European markets initially took the news well and rose strongly, but much of the early gains were surrendered in the afternoon after Germany poured cold water on the package.

A German government spokesman insisted the rescue package be a stand-by facility which can only be used as a last resort and can only be activated with a decision by EU leaders. His comment led to fresh doubts over the effectiveness and readiness of possible aid for Greece.

At the end of the day, European stocks closed slightly firmer on Greece rescue deal. London's benchmark FTSE 100 index rose by a small margin, while in Paris and Frankfurt, the major stock markets there were virtually unchanged.

It was a similar picture for the euro. The single currency climbed to its highest level in nearly a month against the U.S. dollar during the day, but it later retreated to a less stronger position.

Europeans have mixed views to the Greek rescue package. There is clear divergence between the Germans and the Greek.

Public opinion in Germany, the largest economy in the euro zone and the biggest contributor to the Greek rescue package, has been against any bailout for Greece. That is why the German government has been reluctant to pledge billions of euros to help Greece.

After the announcement of the detailed rescue package, Merkel came under immediate attack from some lawmakers. She was accused of backtracking on a promise not to subsidize Greece since the emergency loans for Greece would be provided at below-market rates.

The Greek felt a little bit relieved. Greece's Prime Minister George Papandreou said the detailed package is a very clear message to speculators that they can no longer play with the euro.

He described the mechanism as a gun on the table, saying if the markets remain unconvinced, Greece is ready to activate it.

So far, the Greek government has insisted it does not need any rescue and hope to continue borrowing smoothly from the markets.

Analysts warned the 30-billion-euro package may reduce near- term risks of a debt default by the Greek government, but serious concerns over longer-term problems would weight heavily on the markets.

Athens still needs to raise 11.6 billion euros by the end of May to cover maturing debt, part of about 54 billion euros needed for all this year.

Backed by 30 billion euros made available by eurozone countries, and possibly another 15 billion euros from the International Monetary Fund (IMF), Greece may be saved from a debt default this year.

But with a pubic debt of around 300 billion euros, ten times the eurozone rescue, the Greek government faces a huge challenge ahead to consolidate its public finances.

It was feared that the austerity measures introduced by Athens so far would put additional strains on a weak economic recovery, which may in turn undermine the Greek government's ability to put its house in order.