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Global relief as Greek pro-bailout parties win

business Updated: Jun 19, 2012 01:25 IST

World powers breathed a sigh of relief on Monday after pro-bailout parties won Greece’s election but warned there was no time to lose to form a government committed to austerity measures.

The likely emergence of a left-right coalition has eased fears that Athens will exit the eurozone, a prospect applauded by heads of government and finance chiefs who said it was vital that Greece stay on board.

Greece’s two main pro-bailout parties clinched enough votes to form a government in knife-edge elections on Sunday, as world powers pushed for a new cabinet as soon as possible to ease global fears.

Stock markets across the world responded immediately to the situation in the European nation. Asian markets surged in opening trade and the euro rose. Tokyo stocks jumped 1.96%, Hong Kong surged 1.79%, Sydney was 1.52% higher and Seoul advanced 2.05%.

The news boosted the single currency, which surged to morning highs of $1.2715 and 100.75 yen — up from $1.2644 and 99.47 yen in New York trade late Friday — before easing slightly to $1.2676 and 100.49 yen.

Coalition talks

Antonis Samaras, the leader of the New Democracy party, which narrowly won Greece’s election has begun holding urgent talks to form a coalition, saying he wishes to forge a “national consensus”.

New Democracy won 129 of the 300 parliamentary seats in Sunday’s vote, opening the way for a coalition with the third-placed socialist party, Pasok, which has 33 seats.

According to BBC, with almost all ballots counted, New Democracy has 29.7% of the vote (129 seats), Syriza 26.9% (71) and Pasok 12.3% (33). There are 300 seats in parliament and Greece has a rule that gives the leading party 50 extra seats.

On Monday, Samaras Monday met Greece President Karolos Papoulias seeking a formal mandate to form government. Papoulias said there was “a categorical imperative to form the government” immediately. The president gave Samaras three days for government formation.

Samaras said he would seek changes in the terms of a bailout agreement reached with the Europian Union and International Monetary Fund.

After holding talks with the president, Samaras met Alexis Tsipras, the leader of Syriza. The second-place Syriza party has rejected the terms of the bailout and said it would form the opposition.

New Democracy and Pasok have pledged to implement an austerity programme in bailout deals worth over 200 billion euros, with the European Union and International Monetary Fund, to avert Greek bankruptcy.