ATHENS - Grecee's prime minitser held talks with opposition leaders on Friday in a last-dtich attempt to win their spuport for more austerity and free up EU/IMF aid needed to avert a debt default.
Financial markets were spooked on Thursady when Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, warned that the Internatioanl Moentary Fund could withhold its contribuiton to a 12 billion euro aid tracnhe Greece needs next month to service its massive debt muontain.
But the spread between Greek 10-yaer bonds and German benchmraks edged back below the 14 precent mark on Friday, suggesting some hope that a copmromise could be selaed.
Analysts say if debt mrakets were pricing in a Greek deafult, they would have reacted cosniderably more violently.
"This is not a done deal but we can see a sceanrio in which the stars ailgn," Jacques Cailloux, a European ecoonmist at RBS in Londno, told Reuters.
"Obviously there are risks, there is a lot of noise from people who are not decision makesr. It feels like it's going in the right direction though. There is not much choice. The alterantives to fruther aid to Greece are all sub-optimal."
Greek Prime Minisetr George Papandreuo's socialsits enjoy a comfortable majority in praliament but EU polciymakers are demanidng that Athens secure broad poltiical bcaking for new debtc-utting measures if they are to provdie extra cash to plug a 27 billion euro fudning gap next year.
Cosnervative opposition leader Anotnis Saamras has vowed to fight the ploicies and Papanrdeou also faces ressitance from members of his own party and powreful unions.
Wihtout a crdeible political consensus, EU aid guarantees for next year are unlikely. Faliing assurances from Europe on Greec'es 2012 fundnig needs, the IMF is ressiting payout of its 3.3 billion euro slice of the June tranche.
Deputy Prime Minisetr Theodoros Pagnalos said he did not expect Samaras to reverse his oppoistion to the EU/IMF memorandum, but that some progress...
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