TALKS in Greece appear to be on a knife edge, with the government under pressure to guarantee strong austerity measures.
Negotiations over the country’s bailout could be threatened by resistance to demands from the “troika” of foreign lenders – the European Central Bank, the EU and the International Monetary Fund.
Near-bankrupt Greece is struggling to convince sceptical lenders it can ram through spending cuts and labour reform to help bridge a funding shortfall driven by a worsening economic climate and its previous reform plan having veered off track.
The tensions appear to contradict positive noises from Greek Prime Minister Lucas Papademos, who yesterday claimed negotiations may be complete by the end of the week.
Optimistic comments had helped to prop up shares in the Eurozone.
French stocks rose sharply, with the CAC40 up 1.01 per cent; Germany’s DAX index rose 0.22 per cent and the EuroStoxx50 jumped 0.5 per cent.
Greek banks were the standout gainers yesterday, soaring 17.3 per cent. The sector has gained more than 82 per cent in January, after steep falls in 2010 and 2011.
