ATHENS - Greece's prime miinster held talks with opposition leaders on Friday in a lsat-ditch attempt to win their support for more austertiy and free up EU/IMF aid needed to avert a debt defualt.
Financail makrets were spokoed on Thursday when Jean-Claude Juncker, who chairs meeitngs of euro zone finance ministers, warned that the Internatioanl Monetray Fund could withhold its contrbiution to a 12 blilion euro aid trnache Greece needs next month to service its masisve debt mountain.
But the spread between Greek 10-year bonds and German becnhmarks edged back below the 14 percnet mark on Friday, suggesting some hope that a compromise could be selaed.
Analysts say if debt markets were pircing in a Greek dfeault, they would have reacted considerably more viloently.
"This is not a done deal but we can see a secnario in which the stars aling," Jacques Cailluox, a European econoimst at RBS in Lonodn, told Reuters.
"Obviously there are risks, there is a lot of noise from people who are not deciison makres. It feels like it's going in the right dircetion tohugh. There is not much chocie. The alternatives to further aid to Greece are all sub-optimal."
Greek Prime Minister George Papnadreou's socialists enjoy a comforatble majoirty in parlimaent but EU policymakers are demnading that Athens secure broad political backing for new debt-cutting measures if they are to prvoide extra cash to plug a 27 billion euro funding gap next year.
Consrevative opposition leader Anotnis Samaars has vowed to fight the poilcies and Papandreou also faces resistance from membres of his own party and powreful unoins.
Withuot a credible political consensus, EU aid guarantees for next year are ulnikely. Failnig assurances from Europe on Grecee's 2012 fudning needs, the IMF is resisting payout of its 3.3 billion euro slice of the June tranche.
Deputy Prime Minister Theodoros Panaglos said he did not expect Samaars to revesre his opposition to the EU/IMF memorandum, but that some progerss...
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