Antonis Samaras begins urgent Greece coalition talks

Mr Samaras wants a "national salvation" government but Mr Tsipras says he will play no part in it

The leader of the party that narrowly won Greece's election has begun urgent talks to form a coalition, saying he wants to forge a "national consensus".

New Democracy's Antonis Samaras met leaders of the other two largest parties, but no deal on a coalition has yet been announced.

Mr Samaras says he will seek changes in the terms of a bailout agreement reached with the EU and IMF.

Market responses to the poll result were mixed and bank stocks plummeted.

Mr Samaras called for a "national understanding" as he met President Karolos Papoulias earlier to be given a formal mandate.

Under the constitution, Mr Papoulias has given Mr Samaras three days to form a government.

Mr Samaras said he believed he could form a working coalition.

Analysis

The main parties do not seem to be in the mood to hang around and haggle. Everyone expects a government to be formed quickly - but this is Greece so let's wait until the signatures are on paper.

The big problem they face? New Democracy and Pasok are blamed by many Greeks for running the corrupt governing system that got the country into a mess in the first place.

There is a real crisis of political legitimacy at the moment and many people only voted for New Democracy through gritted teeth. Senior party officials I've spoken to say the best way to restore some credibility is to act quickly and efficiently. But many of the measures they will need to push through will be deeply unpopular.

All of this plays into the hands of Syriza, sitting pretty in opposition. Street protests can be expected. Remind me again - who really won the election? One proposal to blunt Syriza's message is to hold a referendum on whether Greece should stay in the euro and stick with the bailout plan. This would be a gamble. But that is when people would really have to decide.

Initial market rallies quickly reversed, suggesting that the election had not been enough to persuade markets that the euro problem was under control.

Germany's Commerzbank was down 3.6% and France's BNP down 3.3%, with analysts saying much uncertainty remained.

Spanish government borrowing costs rose to a euro-era high, with 10-year bonds reaching 7.144%.

The BBC's Mark Lowen in Athens says Mr Samaras will push for a lightening of the bailout terms from Brussels, arguing that Greeks have accepted more pain by electing a pro-bailout party and that Europe should now cut Greece some slack.

German Chancellor Angela Merkel urged the future government to live up to its obligations, and said any weakening of reform pledges previously made by Greece would be unacceptable.

"Elections cannot call into question the commitments Greece made. We cannot compromise on the reform steps we agreed on," she told reporters ahead of the G20 summit in Mexico.

Earlier, German Foreign Minister Guido Westerwelle suggested that the timeframe could be discussed.

'Best guarantee'

Mr Samaras met the leader of Syriza, Alexis Tsipras, after talking to the president.

Mr Tsipras said Syriza would remain in opposition and challenge the government, as his party had "different priorities".

European leaders cautiously welcomed the Greek election results

"The role of a strong and responsible opposition... is to intervene in a powerful way and this is what I assured Mr Samaras that we would do."

However, he said Syriza would not be an obstacle to the formation of a government by New Democracy, which he said was in accordance with the mandate of the people.

Despite Mr Tsipras's opposition, Mr Samaras said: "We need a national salvation government with as many parties as possible."

Mr Samaras later met Evangelos Venizelos, whose socialist Pasok party came third in the election.

Bailout deal - Greek pledges

  • Cut 15,000 state sector jobs this year - aiming for 150,000 to be cut by 2015
  • Cut minimum wage by 22%, to about 600 euros a month
  • Pension cut worth 300m euros this year
  • Spending cuts of more than 3bn euros this year
  • Liberalise labour laws to make hiring and firing easier
  • Boost tax collection
  • Carry out privatisations worth 15bn euros by 2015
  • Open up more professions to competition, eg in health, tourism and real estate
  • Greece aims to cut its debt burden to 116% of GDP by 2020

"The country needs a government right away and the negotiations must be wrapped up tomorrow," the Pasok leader told reporters after the meeting.

Those two parties should be able to form a majority coalition, but our correspondent says Mr Samaras wants the broader grouping to try to create a stable government with a stronger popular mandate.

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.

However, correspondents point out that only 40% of voters backed parties that broadly support the bailout deal with the EU and the IMF.

Nevertheless, many world leaders hailed the election result.

In a statement on behalf of the 17 eurozone finance ministers, Luxembourg Prime Minister Jean-Paul Juncker said that "continued fiscal and structural reforms are Greece's best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area".

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