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Europe holds back aid: lenders head to Greece

International lenders are making an unexpected visit to Athens after euro zone countries piled pressure on Greece not to backslide on painful reforms that have caused public outrage.

business Updated: Jun 20, 2011 22:10 IST

International lenders are making an unexpected visit to Athens after euro zone countries piled pressure on Greece not to backslide on painful reforms that have caused public outrage.

The team of European Union and International Monetary Fund (IMF) inspectors will visit on Tuesday and Wednesday. Greek government spokesman Ilias Mosialos said they would discuss changes “at a technical level” to a five-year package of spending cuts, tax hikes and public company selloffs that have touched off weeks of strikes and protests.

The new plan almost doubles existing belt-tightening measures that have helped drive unemployment to a record 16% and extended a deep recession into its third year.

The inspectors’ trip was announced after euro zone finance ministers meeting in Luxembourg on Sunday night delayed approving the next €12-billion ($17.1-billion) tranche of aid from Greece’s year-old, first bailout, which it needs to remain solvent.

Meanwhile, US stocks fell at the open on Monday as a delay in emergency loans to Greece and a possible downgrade of Italy’s credit rating rekindled fears about the euro zone debt crisis, pushing investors out of riskier assets.

European shares also fell on Monday, led by banks.

Investor appetite for riskier stocks fell, with the Euro STOXX 50 volatility index , one of Europe’s main gauges of investor anxiety, rising 11% to its highest level in three months.

Banking stocks, which have been declining since February, featured among the worst performers.

Crude oil prices also fell by more than $1 on Monday, extending last week’s losses.

Gold gained on Monday as the euro strengthened and the precious metal remained supported by euro zone debt woes.

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