Despite making progress, the eurozone debt crisis remains unsolved and, in a repeat of last summer, could still bring nasty surprises to global stock markets in July and August, analysts said.
In measuring up the coming summer weeks, "market sentiment is extremely negative," said Alexandre Hezez, a trader at asset management firm Convictions AM.
With many investors on holiday, trading volumes plummet in July and August which makes for even bigger swings up and down, analysts warned. The Paris stock exchange plummetted 18 percent between July 1 and September 1, 2011.
Since then, eight summits, a budgetary pact, a new rescue fund and more than one trillion euros ($1.22 trillion) injected by the ECB into the struggling financial sector have failed to end the eurozone debt crisis.
Last summer Greece sparked panic, but concerns for Athens have receded to the background after parties wanting the country to remain in the eurozone won an election in June.
Now Spain and Italy are riling traders, with sovereign borrowing rates for both countries spiking to unsustainable levels on the secondary bond market.
"The end of July and the month of August could be very intense," warned Jean-Francois Robin, an investment strategist at Natixis.
"If the Spanish 10-year bond yields spike to above 7.5 percent, Madrid will undoubtedly be forced to call for direct international aid from the new EU rescue fund that is a long way from being ready", Robin said.
"This possibility could freeze up the markets even more."
Hezez said: "We have made great advances, but the risk to banks, which triggered the run on the markets last summer, will not be erased in the next few months."
The mechanisms to lend money to Spain's troubled lenders are still the subject of tense negotiations between eurozone nations. Finland is engaged in bilateral talks with Madrid to impose its own conditions.
Worse yet, the European Stability Mechanism is yet to be set up, with its practical future hanging on a decision on the fund's constitutionality by Germany's highest court that could be delayed to the autumn.
Economist Erik Nielsen of Unicredit Bank urged patience especially in regards to banking union which he said should get its "first component, common bank supervision, sometime during 2013."
But in the meantime, austerity measures privileged until now as the first line of defense against the crisis, seemed have to run their course.
The 65 billion euros ($79.6 billion) in new austerity measures announced this week by Spain will be hard to put in place because unlike a year ago, "the Spanish economy is in recession, which complicates matters," said Christian Parisot, economist at Aurel BGC.
For Parisot, markets are no longer worried about a debt crisis per se, which he says traders have priced in, but more concerned by surprises, such as flagging growth in the world's top two economies, the US and China.
Those surprises could be hidden in company results that will trickle out from now until mid-August.
"Any results below expectations or poor outlooks will make share prices fall sharply on the markets," Parisot said.
