The European Union deal announced early Friday morning is yet another small step along the road to solving the euro zone debt crisis rather than a conclusive solution, analysts and economists told CNBC Friday.
EU leaders have secured new rules on tougher budget discipline but failed to agree on a treaty change to enshrine the rules, making it more likely that the 17 euro zone states will reach a deal separately.
British Prime Minister David Cameron was the most high-profile dissenter from the proposals to grant the EU greater powers.
"This is another stage down the road towards fiscal union and also marks progress in terms of the EFSF and IMF. Obviously, this is not the end station," Jens Larsen, Chief European Economist, RBC, told CNBC.
Markets will probably need to see a precautionary facility from the International Monetary Fund for Italy, Larsen added.
Two of the key elements to Friday's deal were automatic sanctions against countries in the euro zone which break its deficit rules – as Greece did - unless three-quarters of states vote against the move, and a new fiscal rule on balanced budgets becoming part of national constitutions.
"The key thing here is the enforcement mechanism," said Larsen. "In the end, the test will be if the new rules are enforced, if governments are really willing to impose fines on each other for breaking these rules."
Despite a flurry of meetings in recent months, European leaders do not appear to have reached the end point of these negotiations, analysts believe.
"The deal won’t make a material short-term difference to the current situation," analysts at Lloyds wrote in a note. "Continued market disappointment is essentially a function of unrealistic expectations."
They believe that if the euro can hold at around 1.32 against the dollar through Friday and Monday, there could be a bounce in the single European currency for the rest of the year.
Periphery in Focus
There are also several fundamental problems in the euro zone that are not directly addressed by the most recent agreement.
Slowing growth rates and problems in heavily indebted peripheral economies such as Greece and Portugal are still causing concerns.
"What we have got is a continuation of kicking the can down the road for another few months," Bill Blain, Senior Director, Special Situations Group, Newedge, told CNBC.
"We have got all the ingredients in place to keep us wondering: 'What happens next?' The real issue is growth and this agreement does nothing to address the problem of growth in the euro zone," Blain pointed out.
Peripheral countries' economic health remains one of the chief concerns for the markets.
"The risks of an accident keep increasing. It's important to have an agreement on fiscal rules, but nothing in this agreement will strengthen the policy framework and crisis response in the periphery today," Thanos Vamvakidis, Head of European G10 FX Strategy, BofA Merrill Lynch Global Research, told CNBC.
"The periphery is in this vicious circle, where there's no successful fiscal consolidation without growth."
The news about the EU summit overshadowed some positive news from the European Central Bank (ECB), which on Thursday relaxed part of its rules to help boost liquidity.
ECB President Mario Draghi announced that the bank will make three-year loans to euro zone banks for the first time without penalty interest rates, and with looser collateral rules.
"What the ECB did is intelligent and a good move," Tim Skeet, Managing Director, RBS Global Banking & Markets, told CNBC.
"The banks have had an awful year-end in terms of raising liquidity and we have the ECB recognizing this."
The move should help buoy the troubled euro zone bond markets.
"If I was a cynical bank chairman looking to increase returns, I would simply go out and buy as much Italian and Spanish government debt as possible and repo it all to the ECB," said Blain. "That way, the ECB ends up supporting the markets and everything is back to normal again."