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Posts Tagged ‘Greek’

Fuel crisis as Greek truckers step up strike

In Uncategorized on July 28, 2010 at 3:18 pm

ATHENS (AFP) – Greece’s government on Wednesday called crisis talks to deal with a nationwide fuel crisis as a truckers’ strike entered its third day at the height of the busy tourism season.

Fuel has run out in all but a few of the capital’s petrol stations and shortages are already reported in many major cities.

People stand next to a sign reading ‘only Super in a petrol station in Athens on July 27, 2010. AFP

The transport ministry has invited union leaders to talks to break the deadlock which began over plans to liberalise the freight sector.

The truckers say that opening the sector by reducing new licence charges is unfair to existing operators who have already paid high start-up fees running up to 300,000 euros (390,000 dollars).

“The state sold us these licences, so the state should compensate us,” the head of the truckers’ union George Tsamos told Flash Radio.

The protest has had a major impact on the country’s tourism season which is vital to the Greek economy as it battles an unprecedented financial crisis.

Hoteliers on Wednesday said they were already facing cancellations from vacationers unwilling to risk the journey until the protest ends.

“We have started receiving an important number of cancellations,” said Nikos Papalexis, the head of the Achaia hoteliers union in the northwestern Peloponnese peninsula.

“If this situation continues, a lot of hotels will have to dismiss staff or even shut down,” he told state television NET.

Source: SGGP

More travel misery from Greek general strike

In Uncategorized on June 29, 2010 at 12:46 pm

ATHENS (AFP) – Travellers in Greece on Tuesday ran a labour gauntlet for the second time in a week as a general strike against pensions reform shut down services and disrupted departures from the capital.

But authorities took swift action to keep the main port of Piraeus from being blockaded, sending around 1,000 coastguards and police to keep unionists from seizing control of ferries.

Public Power Corporation employees protest outside their company’s headquarters with a banner reading: “We are not selling. We are not for sale” on June 28, 2010 in Athens. AFP

Some 500 Communist-affiliated strikers gathered at the harbour but were prevented from approaching the ships to the Aegean islands which include some of Greece’s top travel destinations, a coastguard source said.

However, they were able to block the departure of smaller vessels to islands closer to Athens.

“All the early boats to Aegean destinations have departed,” a coastguard spokeswoman told AFP.

“There are increased operational measures at the harbour and things are calm,” she said.

The general strike called by the main Greek unions is the fifth since February against a wave of austerity measures imposed by the government as it struggles to staunch a national debt crisis.

Separate street demonstrations against the sweeping spending cuts were planned in central Athens and other main Greek cities later on Tuesday.

A one-day protest on June 23 stranded thousands of travellers at one of the Mediterranean Sea’s busiest ports for hours.

The recurring labour unrest has cost Greece booking cancellations and millions of euros in damages at a time when the debt-hit nation is struggling to maximise its revenues and revive its flagging economy.

“Greek islanders are counting on the next month for funds,” Manolis Galanakis, deputy chairman of Greek coastal shipping associations, told Mega television.

He added that some 18,000 people were scheduled to sail from Piraeus on Tuesday.

A court late on Monday declared the ferry strike illegal but the Communist party and its related syndicates dismissed the ruling.

“Legality is relative. How can someone losing their job be considered legal?” the head of the Piraeus labour centre Nikos Xourafis told the television station.

Tourism contributes 17 percent of Greece’s gross domestic product.

Greece’s main airlines grounded nearly 50 of Tuesday’s domestic flights because of the strike while rail access to Athens airport was also impeded. Intercity trains also ran a reduced service along with hospitals while state offices shut down altogether.

No news was broadcast as journalists joined the action.

Lawmakers on Tuesday were to begin discussing a disputed pension reform tabled by the government that raises the general retirement age to 65 years for both men and women for the first time.

It also increases the mandatory workforce period from 37 to 40 years and cracks down on early retirement.

Source: SGGP

Greek PM does not rule out legal action against US banks

In Uncategorized on May 16, 2010 at 8:55 pm

A view of the Acropolis in central Athens on May 14, 2010 is seen at sunset. AFP photo

ATHENS, May 16, 2010 (AFP) – Greek Prime Minister George Papandreou raised the possibility of taking legal action against US banks which he said in an interview on Sunday bore “great responsibility” for Greece’s debt crisis.

Asked in an interview with CNN whether Greece was the victim of investment banks, he said: “I think, yes the financial sector, I hear the words fraud, lack of transparency, so yes there is great responsibility here.”

When the interviewer followed up by asking whether legal action were a possibility, he responded “I wouldn’t rule out that this may be a recourse,” according to extracts of the interview aired on Greek public television.

The Greek parliament is currently looking into deals Greek authorities carried out in 2000 with help from Goldman Sachs that allowed them to mask the extent of Greece’s debts through the use of complex financial instruments.

“Right now there is a parliament investigation in Greece, we are looking into the past how things went in the wrong direction and what kind of practices were negative practices,” Papandreou said.

German Chancellor Angela Merkel has led criticism in Europe against banks’ role in the debt crisis, slamming “treacherous” practices during the Greek drama and urging governments to crack down on speculators hunting profits in the turmoil.

Greece is paying a painful price for its past overspending with the government forced to slash civil servants’ and pensioners’ pay while raising taxes as a condition for a 110 billion euro EU-IMF bailout.

However, a poll published Sunday in the Ethnos newspaper found that 58.8 percent of the 1,028 people surveyed expected the country to steer clear of bankruptcy while 36.6 percent considered default inevitable.

While 56.2 percent of those polled by the Marc SA institute considered the austerity measures to be “necessary”, 87.8 percent judged them to be “unfair”.

Source: SGGP

Greek fears spook markets as Europe leaders meet

In Uncategorized on May 7, 2010 at 4:38 am

World stock markets tumbled Friday as fears grew over the fallout from Greece’s debt crisis, despite the approval by lawmakers in Athens of savage belt-tightening measures in the face of widespread unrest.

As leaders of the 16 nations which use the euro single currency gathered to discuss how to tame the turmoil, investors deemed efforts so far as inadequate with heavy losses on Asian markets echoing similar falls in Wall Street.

Greek Prime Minister George Papandreou on Thursday bulldozed a package of spending cuts and tax hikes through parliament with the help of his Socialist party’s majority, as police battled hundreds of youth protestors outside.

Warning that “the future of Greece is at stake,” he won backing for the plans, demanded by eurozone partners and the International Monetary Fund in return for a 110 billion euro (145 billion dollar) bailout.

Riot police clash with demonstrators in Athens. World stock markets tumbled Friday as fears grew over the fallout from Greece’s debt crisis, despite the approval by lawmakers in Athens of savage belt-tightening measures in the face of widespread unrest

“We can guarantee that with us the country will not go bankrupt,” Finance Minister George Papaconstantinou said after the vote.

The austerity plan commits to spending cuts of 11.2 billion euros by 2012.

End of year bonuses will be scrapped for public sector workers as well as for pensioners. Value added tax is to be raised from 21 percent to 23 percent this year and other new taxes, including for gambling and company profits, are to be introduced.

The package has sparked widespread protests in Greece where a general strike on Wednesday was overshadowed by a firebomb attack on a bank which killed three people.

France early Friday approved 16.8 billion euros (21.2 billion dollars) in emergency state loans for Athens ahead of the European summit in Brussels to stem a domino effect in the countries that share the euro.

The loans carry a five percent interest rate and 3.9 billion euros will be made available next year.

The immediate worry for the 16 eurozone leaders when they hold a summit in Brussels later Friday will be whether economists are right to warn that the politicians are losing control of a spiralling European debt crisis.

Moody’s ratings agency on Thursday warned that the fallout from the Greek debt crisis presented a risk of “contagion” for the credit rating of banks in Britain, Ireland, Italy, Portugal and Spain.

As Japan’s Nikkei stock index closed its morning session down 3.74 percent, Prime Minister Yukio Hatoyama said he was “very concerned” and the central bank in Tokyo said it would inject more than 20 billion dollars in liquidity into financial markets.

And after the Australian market lost almost three percent in early trade, Prime Minister Kevin Rudd said his government was watching developments to restore market confidence with “considerable concern”.

“Markets have judged those arrangements to be inadequate,” Rudd said.

Asia’s traders took their cue from a record drop of almost 1,000 points on the Dow Jones Industrial Average before it recouped more than half those losses on Thursday.

Nobel laureate economist Joseph Stiglitz wrote earlier this week that the Greek financial crisis “has put the very survival of the euro at stake”.

A diplomatic source told AFP that a report compiled by a team led by former Spanish premier Felipe Gonzalez will this weekend recommend coordination of crisis-hit European Union public finance budgets.

They will include “a far greater push towards concerted action” on economic coordination, the source said.

In Lisbon, European Central Bank chief Jean-Claude Trichet battled to reassure financial markets that Greece’s debt crisis would not end in default, but could not prevent the euro falling to a 14-month low against the dollar.

Pushed to the brink of default, the Greek government agreed last weekend to slash spending and hike taxes in return for the three-year loan package.

The bailout has sparked public rage, but people on the Athens street voiced anger and bitterness Thursday at the deaths of the bank workers — who reportedly included a four-month pregnant woman.

Source: SGGP

Greek unions call fresh protests ahead of austerity vote

In Uncategorized on May 6, 2010 at 4:36 pm

Greek unions mobilised Thursday for new demonstrations against draconian austerity cuts as the government raced to push the unprecedented measures through parliament a day after deadly rioting.

A protest near the Parliament building in the center of Athens.

The main unions called their members to new protests from 6 pm (1500 GMT) undeterred by the deaths of three people, reportedly including a pregnant woman, in a firebombed Athens bank the previous day when demonstrations degenerated.

Condemning “the fires, blind violence, vandalism”, the million-member GSEE private sector union said in a statement “we are determined to pursue and extend our struggle to meet our fair demands.”

As the government insisted it would not back down on the austerity drive, eurozone leaders scrambled to keep Greece’s debt crisis from spreading to other highly indebted countries like Spain and Portugal

The European Central Bank held one of its most crucial meetings ever in Lisbon to rein in the Greek debt crisis while eurozone leaders prepared to meet on Friday in Brussels to contemplate the future of their embattled bloc.

As unions prepared for a fresh round of demonstrations, Greek lawmakers were debating the government spending cuts and tax hikes with voting on the legislation due to begin in the afternoon.

Finance Minister George Papaconstantinou told parliament the austerity drive, which eurozone countries and the IMF have demanded in return for a bailout, was the only option.

“The only way to escape bankruptcy is to accept the aid money, which reaches 110 billion euros… and the precondition is to agree on the three-year austerity plan,” Papaconstantinou said during the debate.

Average Greeks voiced sadness and bitterness in the streets of central Athens as the nation was still reeling from the shock killing of the bank workers.

“I’m sad and I’m angry because those people who threw the Molotov cocktails don’t respect the lives of other people,” said Chris, a 30-year-old who works for a small private company and who participated in the demonstrations.

Anita, who works in a bank not far from the bank that caught fire, said that the firebombing blamed on young hooligans was “the saddest thing that could ever happen to Greece”

“I was working in my bank, we saw the fire, it could have happened to me”,” she said. “This has nothing to do with the protests, the demonstration was peaceful.”

As protestors marched on Wednesday against the government’s plans to avert national bankruptcy and the strike shut down much of the country, some demonstrations turned violent.

Demonstrators tried to storm the parliament and hooded youths hurled petrol bombs at stores and businesses in central Athens, prompting police to respond with tear gas and charges.

Police said two women and one man died at a branch of the Marfin bank which caught fire after rioters broke a window and threw Molotov cocktails inside.

One of the women who died was four months pregnant, according to doctors quoted by the Greek press.

At least two other buildings — the Athens prefecture and one used by tax officials — caught fire after other firebomb attacks on the margins of the protests.

The general strike was the first major test of the Socialist government’s resolve to push through unprecedented measures since agreeing to a 110 billion euro (143 billion dollar) EU and IMF debt bailout at the weekend.

Officers arrested at least 12 people in Athens and another 37 in the northern city of Thessaloniki, where protestors also targeted stores and banks in the city centre before riot police dispersed them.

The violence in Athens sparked concerns on global financial markets that Greece’s huge bailout could veer off course and that its debt crisis could engulf other countries.

The euro dived to the lowest level for more than one year as the deadly protests in debt-plagued Greece cast a shadow over the future of the eurozone and the single currency, dealers said.

Moody’s ratings agency on Thursday warned that the fallout from the Greek debt crisis presented a risk of “contagion” for the credit rating of banks in Britain, Ireland, Italy, Portugal and Spain.

Spain helped investors immediate fears of contagion after the government successfully raised 2.345 billion euros in the country’s first debt sale since its credit rating was cut last week.


Source: SGGP

Greek crisis shows world economy turmoil not over: Australia

In Uncategorized on May 6, 2010 at 4:37 am

Greece’s violent street protests and economic turmoil are “disturbing” developments that serve as a reminder that the global financial crisis is not yet over, Australian leader Kevin Rudd said Thursday.

A fire-bomb attack on a bank in Greece has killed at least three people as police fought pitched battles with striking protestors furious at brutal budget cuts designed to avert national bankruptcy.

The Greek debt crisis and riots were a “sober reminder” that the “health of the European financial system could affect what was going on across the world,” Prime Minister Rudd told reporters.

“We have done well in Australia to navigate this economy through the global financial crisis,” he said.

“But looking globally, the global financial crisis ain’t over yet and we are not out the woods yet either,” he said, adding that the latest developments in Greece were “disturbing.”

Financial markets worldwide suffered heavy losses on Wednesday, spurred by renewed fears that a massive Greek bailout will not be enough to stop its debt crisis from hitting Spain and Portugal.

Three people were killed in a fire started by Molotov cocktails thrown into a bank by rioters in Athens during a protest against budget cuts promised by the Greek government as part of its European Union bailout plan.

Greece’s President Carolos Papoulias called on the country to step back from the brink after the protests and a general strike called by trade unions.

The Australian stock market opened about 1.2 percent lower on Thursday and then extended those losses through the morning, with big banks and major miners losing ground amid global jitters over the developments in debt-laden Greece.

Australian authorities are monitoring the crisis and will issue a travel advisory to tourists to Greece if necessary, Rudd said.

“The department of foreign affairs will be analysing the situation carefully and issuing any appropriate revisions to travel advisories,” the prime minister told reporters near Melbourne.

Source: SGGP

Eurozone set to endorse Greek bailout plan Sunday

In Uncategorized on May 3, 2010 at 8:33 am

 Debt-laden Greece‘s eurozone partners are set to endorse a multi-billion euro emergency bailout package on Sunday, after six months of fraught negotiations marked by German reticence.

Rioting in Greece Saturday over tough government belt-tightening piled the pressure on the 15 other countries that use the euro currency to release the rescue funds in a joint deal with the International Monetary Fund.

German Chancellor Angela Merkel however has insisted that this help can’t be unconditional, so the desperately needed loans of up to 120 billion euros (160 billion dollars) will be offered in return for more deep cuts in spending and tax rises.

The EU and the International Monetary Fund have asked for Greece to slice 10 percentage points off a public deficit that ballooned to 13.6 percent of output in 2009, according to a German union official.

A demonstrator tries to avoid a petrol bomb during clashes between police and demonstrators in central Athens.

A Greek finance ministry source said the deal was finally concluded on Saturday evening after round-the-clock talks in Athens with the European Commission and the IMF.

The cabinet of Prime Minister George Papandreou was due to meet at 9:30 am (0630 GMT) Sunday to announce the deal live on television, a Greek government source told AFP.

Then at 4:00 pm (1400 GMT) in Brussels, the 16 eurozone finance ministers will meet, hoping to formally back the plan.

The sprint to the finish is not only a bid to save Greece from defaulting on its loans but also to ward off speculators, who have begun to stalk other weak eurozone economies, especially Portugal and Spain.

The aim of the special meeting in Brussels is to greenlight three years worth of loans to Greece, two thirds of which were to come from euro partners with the remainder from the IMF.

After the finance ministers back the deal, the plan may still go to euro country heads of government and state — the German parliament, for example, would have to approve it.

Only then could the money can be physically transferred to Athens.

Greece has warned it is in danger of defaulting on its debts if markets are allowed to sustain their attacks in the run-up to a critical May 19 deadline.

Germany appeared to soften its resistance to a bailout over the past week as the interest Greece has to pay to raise funds shot up to a punitive 10 percent — twice the five-percent rate expected to be on offer from the EU.

The final deal will force fresh budget cuts on Greece through until 2012, as well as broader structural reforms to its overall economy, described by the European Commission as “fundamental.”

Source: SGGP

Euro at one year low, Greek woes hit Asia stocks

In Uncategorized on April 23, 2010 at 2:28 pm

Greece’s debt crisis weighed on sentiment Friday, with Asian markets mostly lower and the euro hitting a one-year low after the European Union raised its estimate for the country’s deficit.

A weak lead from Wall Street was unable to provide any impetus for dealers after US unemployment data showed people were still struggling to get back on the jobs ladder.

Europe’s statistics agency said Greece‘s 2009 public deficit stood at 13.6 percent of output instead of the previously forecast 12.9 percent, and added that this could rise due to poor data reporting from Athens.

The problem was stoked further when risk evaluator Moody?s Investors Service downgraded its rating on Greece’s debt.

A trader walks through the Hong Kong Stock Exchange.

The rates demanded by Greece’s lenders later jumped above 8.5 percent.

The developments hammered the euro, which fell to 1.3202 dollars at 8:02 am (2302 GMT Thursday) in Tokyo, its lowest since April 30, 2009 before trimming losses to 1.3235 in the afternoon. It had traded at 1.3289 dollars in New York late Thursday.

Against the yen, the euro fell to 123.63 from 124.23 in New York. The dollar traded at 93.43 yen, slightly lower than 93.46 in New York.

The revision came as Athens tried to broker the terms of a bailout from the European Union and International Monetary Fund to avert a possible debt payment default caused by the soaring interest rates.

“Markets have become more nervous about the negotiations between Greek, IMF and EU officials and the potential for contagion if these negotiations fall through,” Barclays Capital said in a note to clients.

“EU and IMF officials are not likely going to agree to a bailout package without Greece agreeing to significant fiscal restructuring,” the investment bank said. “This becomes more likely as financial conditions worsen in Greece.”

The deepening crisis has upped pressure on other eurozone members such as Ireland, Spain and Portugal, who all face similar problems and whose dangers were highlighted by the IMF Wednesday.

Asian stocks were lower as dealers became more risk-averse.

Tokyo closed 0.32 percent, or 34.63 points, lower at 10,914.46 as exporters were hurt by the strengthening yen.

Sydney gave up 0.53 percent, or 25.9 points, to close at 4,881.5.

Hong Kong fell 0.77 percent by the break and Singapore lost 0.26 percent.

Shanghai lost 0.60 percent as investors remained worried over recent policy measures taken to curb speculation in the real estate market, dealers said.

“Property and bank stocks will likely remain sluggish with the overhang of policy tightening concerns,” Guosen Securities analyst Wang Junqing told Dow Jones Newswires.

Shares in New York were flat after the Labor Department on Thursday reported new claims for unemployment insurance benefits fell five percent last week after a fortnight of increases.

“The actual level of claims is still quite high, and although the trend in claims could support the notion that the labour market has stabilised, it does not support the notion that there has been a strong pickup in hiring activity,” said Patrick O’Hare at

Eyes were also on the United States, where President Barack Obama slammed Wall Street for greed but called for help from the “titans of industry” in overhauling the financial system to avoid another financial crisis.

“We will not always see eye to eye. We will not always agree. But that does not mean we have to choose between two extremes,” he said, calling for new, “common sense” rules to quell abuses but retaining the “power of the free market.”

Markets are also awaiting weekend G20 talks in the United States, where a global “Tobin tax” on financial transactions and the Chinese yuan‘s peg to the dollar will likely be discussed.

Oil was lower, with New York’s main contract, light sweet crude for delivery in June, off 26 cents at 83.44 dollars a barrel. Brent North Sea crude for June dropped 37 cents to 85.30 dollars.

Gold opened at 1,139.00-1,140 US dollars an ounce in Hong Kong, down from Thursday’s close of 1,148.50-1,149.50 dollars.

In other markets:

— Seoul closed 0.14 percent, or 2.49 points, lower at 1,737.03.

Taipei closed up 0.33 percent, or 26.20 points, at 8,004.89.

Hon Hai rose 1.41 percent to 144.5 Taiwan dollars and Taiwan Semiconductor Manufacturing Co was up 0.17 percent to 61.7.

— Manila closed 0.21 percent, or 6.88 points, higher at 3,244.45.

Dealers said trade was cautious ahead of presidential elections on May 10.

Philippine Long Distance Telephone Co. was steady at 2,445 pesos while A and B shares of San Miguel Corp. were also unchanged at 73.50 pesos and 74 pesos, respectively.

— Wellington rose 0.43 percent, or 14.20 points, to 3,301.66.

Telecom added 0.5 percent to 2.19 New Zealand dollars, while Contact Energy added 0.7 percent to 6.22.

Fletcher Building edged up 0.1 percent to 8.44.

Source: SGGP

Euro rises on Greek rescue package

In Uncategorized on April 12, 2010 at 8:53 am

The euro jumped against the US dollar and yen in Asian trade Monday after the 16 nations using the single currency unveiled a 30-billion-euro lifeline for debt-hit Greece.

Chart showing the performance of the euro against the US dollar (AFP/Graphic)

The euro rose to 1.3647 dollars in Tokyo afternoon trade from 1.3497 in New York late Friday. It was up against the yen at 127.35 in Tokyo from 125.51.

The dollar fetched 93.28 yen, up from 93.18 Friday.

Finance ministers from the countries that share the under-pressure euro agreed a three-year financing programme at interest rates of around five percent to help Greece and restore confidence in the single currency.

The rescue package is intended as a back-up plan in case Greece is no longer able to raise funds to repay its debts and finance its budget on financial markets because of excessively high interest rates.

However, “the initiative for activating the rescue package rests with the Greek government and we’d be surprised if they didn’t use it in the absence of a sharp fall in borrowing costs,” said NAB Capital strategist John Kyriakopoulos.

In the days ahead of the agreement, the euro fell sharply and the yield on Greek 10-year bonds hit the highest level since 1998 amid persisting doubts about whether Athens’ eurozone partners would offer loans if needed.

“The euro is firmer as traders took heart from the Sunday announcement of the aid package for Greece,” said Daisuke Karakama, forex analyst at Mizuho Corporate Bank.

“But the gain could be short-lived as I can’t find many fresh factors from what’s written in the statement,” he added.

“The undertone of the euro’s weakness against the dollar probably won’t change for a while,” he said.

The IMF’s role in the unprecedented aid package for Greece is due to be the focus of talks starting on Monday.

EU Economic and Monetary Affairs Commissioner Olli Rehn said it would be for the IMF to reveal its precise share, but that “in principle” the split would be of the order of 2:1 for funding between the EU and the IMF.

An EU official said it would mean another 15 billion euros.

Dealers were also closely watching US data for clues on the recovery of the world’s largest economy, such as data on the retail sector due out this week, Karakama said.

In regional trade, the dollar declined to 32.26 Thai baht from 32.29 on Friday, to 1.3885 Singapore dollars from 1.3947 and to 9,003 Indonesian rupiah from 9,033.

It eased to 31.50 Taiwan dollars from 31.56, to 1,114.55 South Korean won from 1,118.70 and to 44.78 Philippine pesos from 44.82.

Source: SGGP

Greek crisis to overshadow ECB policy meeting

In Uncategorized on April 8, 2010 at 11:52 am

FRANKFURT (AFP) – The swelling Greek debt crisis will overshadow the European Central Bank’s policy meeting Thursday, with markets looking for nuances in support for Athens as it struggles to make ends meet.

Esoteric details of a new policy on collateral that eurozone banks put up to get ECB funds “could be immensely important for Greece and its banks,” Goldman Sachs economist Erik Nielsen said.

An employee walks through the Athens stock exchange. AFP photo

The policy will give investors a clearer idea of how much Greece’s sovereign debt will be worth and could thus help ease unrest that might otherwise spread to other weak eurozone members such as Portugal or Spain.

“This might just be one of the most important communications by the ECB in its short existence,” Nielsen said.

It is crucial for Greece that banks are able to continue to access ECB funds by putting up Greek government bonds as collateral despite pressure on the country’s credit rating.

The main ECB interest rate will remain unchanged meanwhile at a record low of 1.0 percent, analysts say, while ECB president Jean-Claude Trichet will likely be pressed to clarify his position on possible IMF aid for Athens.

Trichet and other ECB directors had voiced strong opposition to aid by the International Monetary Fund to a eurozone member state, but it is increasingly likely such help will be necessary as part of a European Union rescue plan.

UniCredit analysts said: “Trichet will praise the agreement reached by EU leaders, but will probably add that the ECB considers IMF involvement as a last-resort, second-best solution.”

The German daily Frankfurter Rundschau said Thursday that an internal German central bank note concluded the EU agreement would force the Bundesbank to transfer money directly to the Greek finance ministry and warned the deal “implies risk to stability that should not be underestimated.”

The Bundesbank also reportedly criticised a possible IMF role, saying the Fund might be less strict with Greece than assumed. Related Article: Greek crisis coming to a head

A bank spokesman told AFP a working paper on the issue existed but declined to comment on its content, saying it had not been presented to bank directors.

Greek borrowing costs spiked to a record 7.322 percent on Thursday, the highest level since the country joined the eurozone in 2001, as confidence in Athens’ ability to master its debt and deficit crisis fell steadily, dealers said.

The country must refinance tens of billions of euros (dollars) in debt in the coming months and problems finding the funds at rates that will not make the crisis worse have become a fundamental test of the eurozone’s credibility.

Trichet has repeatedly expressed confidence in the ability of the Greek authorities to tackle the crisis, in part through disputed austerity measures, while financial markets and investors demonstrate their increasing scepticism.

“The bond market is getting a little impatient again on where exactly we are on the EU/IMF backstop package,” ING debt strategist Padhraic Garvey noted.

The Financial Times reported Thursday that savers had taken 10 billion euros (13 billion dollars) in deposits from the Greek financial system, and the country’s four largest banks have asked the government for guarantees worth 15 billion euros under a support scheme set up last year.

Europe’s single currency has been undermined by the turmoil, which has also revealed sharp differences in the position of eurozone powerhouse Germany with respect to influential neighbours like France and Italy.

The euro weakened to 1.3332 dollars in Asian trading on Thursday.

Elsewhere in Europe, the Bank of England is expected to leave its key interest rate unchanged at 0.50 percent Thursday although Britain is emerging from a record recession in better shape than previously thought.

Source: SGGP