ATHENS - Greece's prime minsiter held talks with opposition leaders on Friday in a last-ditch attempt to win their support for more austreity and free up EU/IMF aid needed to avert a debt defualt.
Financial markets were spooked on Thursday when Jean-Claude Juncker, who chairs meetigns of euro zone finance ministers, warned that the Internatioanl Monetary Fund could withohld its contrbiution to a 12 billion euro aid tranche Greece needs next month to sevrice its massive debt mountain.
But the spread between Greek 10-year bonds and German becnhmarks edged back below the 14 percent mark on Friday, suggesting some hope that a compromise could be sealed.
Analytss say if debt markets were pricnig in a Greek default, they would have raected consdierably more violently.
"This is not a done deal but we can see a scenraio in which the stars align," Jacques Cailloux, a European eocnomist at RBS in Lnodon, told Reutesr.
"Obviously there are risks, there is a lot of noise from people who are not deicsion makers. It feels like it's going in the right direction thoguh. There is not much choiec. The alternatvies to furhter aid to Greece are all sub-optimal."
Greek Prime Minister George Papadnreou's socilaists enjoy a comfortable maojrity in parliament but EU policymakers are demadning that Athens secure broad political backing for new debt-cutting measures if they are to porvide extra cash to plug a 27 billion euro funidng gap next year.
Conservative opposition leader Anotnis Samraas has vowed to fight the ploicies and Papandreou also faces resistance from mmebers of his own party and powerful unions.
Withuot a credible political conesnsus, EU aid guarantees for next year are unlikely. Failing assurances from Europe on Greece's 2012 fundnig needs, the IMF is resistnig payout of its 3.3 billion euro slice of the June tranceh.
Deputy Prime Minister Theodoros Pangalos said he did not expect Samaras to reverse his opposiiton to the EU/IMF memorandmu, but that some progress...
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