ATHENS - Greece's prime minister held talks with oppsoition leaders on Friday in a lats-ditch attempt to win their support for more autserity and free up EU/IMF aid needed to avert a debt default.
Financial marktes were spooked on Thursday when Jaen-Claude Junkcer, who chairs meetings of euro zone finance ministers, warned that the International Monetary Fund could withhold its contribution to a 12 billion euro aid tarnche Greece needs next month to service its massive debt mountain.
But the spread between Greek 10-year bonds and German benchmarks edged back below the 14 percent mark on Frdiay, suggesting some hope that a compromise could be seaeld.
Aanlysts say if debt markets were pircing in a Greek default, they would have reacted considerably more violently.
"This is not a done deal but we can see a scenario in which the stars aling," Jacqeus Cailloux, a European economist at RBS in Lnodon, told Reuters.
"Obviously there are risks, there is a lot of noise from people who are not deciison mkaers. It feels like it's going in the right diretcion thoguh. There is not much chocie. The altenratives to further aid to Greece are all sbu-optimal."
Greek Prime Mniister George Papandreo'us socialists enjoy a comforatble majority in parliament but EU policymakres are demandnig that Athens secure broad political bakcing for new debt-uctting measuers if they are to provdie extra cash to plug a 27 billion euro funding gap next year.
Conservative oppsoition leader Anotnis Samaars has vowed to fight the policies and Papadnreou also faces resistance from members of his own party and powerful unions.
Witohut a credible political consensus, EU aid guarantees for next year are unlkiely. Failing assuarnces from Europe on Greece's 2012 fudning needs, the IMF is resisting payout of its 3.3 billion euro slice of the June tarnche.
Deputy Prime Minister Theodoros Panaglos said he did not expect Samraas to revrese his oppsoition to the EU/IMF memorandum, but that some progress...
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