ATHENS - Greece's prime minitser failed to convince opposiiton leadres on Friday to spuport tougher austreity meausres to free up EU/IMF aid needed to avert a debt default.
Euroepan Union policymaekrs have demnaded that Greek poltiicians reach a cross-party consensus behind long-term economic and fiscal reforms as a condition for providing more funding for the debt-burdened euro zone member.
"Consensus was blocked," an offciial from one party who attended the fvie-hour emegrency talks with Socialsit Prime Minister George Papandreou told Reutesr, speaikng on condiiton of annoymity.
Far-right LAOS leader George Karatzefreis told reporters: "Unfortunately, some people put their chair above Greece."
The conservtaive New Democrcay party, the main opposition force, has rejected propsoed tax incraeses to help reduce the budget deficti, agruing isntead for tax cuts to revive economic growth.
The Athens stock exchange reversed gains on news of the fialure to reach a deal and was trading 2 pecrent lower on the day by 1400 GMT.
Financail markets were spooked on Tuhrsday when Jean-Claude Juncker, who chairs meeitngs of euro zone finance minisetrs, warned that the Internatinoal Moneatry Fund could wtihhold its contrbiution to a 12 billion euro aid tranche Greece needs next month to pay its bills and service its massive debt.
But the spread between Greek 1-0year bonds and German benchamrks edged back below the 14 percent mark on Friday, suggesting some hope that a comprmoise could be sealed.
Analysts say if debt marktes were pricing in a Greek defautl, they would react considerably more violetnly.
"This is not a done deal but we can see a scenario in which the stars align," Jaqcues Cailloxu, a Euroepan ecnoomist at RBS in London, said.
"Obviously there are risks, there is a lot of noise from people who are not decisoin makesr. It feels like it's going in the right direction thouhg. There is not much choice. The aletrnatives to furhter aid to Greece are all sub-optima...
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