19 Jun 2012

Talks continue in Greece

3:35 pm on 19 June 2012

Greece is set for a second day of coalition talks, under pressure from financial markets and world powers, after elections won by pro-euro parties but which also reflected rising anger against austerity.

New Democracy conservatives, who came first in the elections, say they have struck a preliminary agreement with the socialist Pasok party to form a government.

Europe and the United States have urged Greece to move quickly to enact reforms under the terms of a multi-billion bailout deal with the European Union and the International Monetary Fund.

Saying the country cannot remain ungoverned even for an hour, the Greek President Carolos Papoulias has given New Democracy three-days to form a coalition.

World stock markets initially rallied in reaction to Sunday's elections but the gains quickly petered out amid broader concerns about other indebted euro economies such as Italy and Spain.

Antonis Samaras, leader of New Democracy, has begun urgent talks to form a coalition and an official says it is close to forming a new government.

In Sunday's election New Democracy won 29.7%, anti-bailout grouping Syriza 27% and the Pasok party 12.3%.

After meeting Mr Samaras, Pasok leader Evangelos Venizelos said the country needed a government immediately and negotiations must be wrapped up on Tuesday.

Mr Samaras has also met the leader of Syriza, Alexis Tsipras, who said his party would remain in opposition and challenge the government, as his party had "different priorities".

The radical left-wing coalition came a close second in the election after campaigning on a promise to reject the terms of European Union and International Monetary Fund bailouts.

Mr Samaras has said Greece will meet its commitments under the bailout that is saving the country from bankruptcy and also from leaving the euro zone.

But he says he will seek changes in the terms of the bailout agreement in order to relieve Greek people from crippling unemployment and hardship.

European leaders have, however, indicated there is limited room for manoeuvre. German Foreign Minister Guido Westerwelle has said the substance of the bailout agreement was not negotiable though creditors might be willing to offer some flexibility on timing.

The election on Sunday was the second in just over a month; the first on 6 May was inconclusive and the main parties failed to form a coalition.