ATHENS/PARIS, May 15 (Reuters) – Attempts to form a
government in Greece collapsed on Tuesday, jolting financial
markets at the prospect leftists opposed to the terms of an EU
bailout could sweep to victory and nudge the euro zone crisis
into a dangerous new phase.
The turmoil in Athens sent waves around other troubled
members of the 17-nation European single currency area. The euro
slipped below $1.28 while Spanish and Italian bond yields
rose above the danger level of 6 percent as investors scurried
for shelter in safe haven German Bunds.
The tremors from Greece, compounding worries about Spain’s
debt-laden banking system, ended any honeymoon for new French
President Francois Hollande, thrusting the growing risks to the
euro zone to the top of the agenda for his first meeting with
German Chancellor Angela Merkel hours after he took office.
In his inaugural address, the Socialist president called for
a European pact to revive growth and temper German-driven
austerity measures, seeking to change the direction of euro zone
“I will propose to our partners a pact that will tie the
necessary reduction of our public debt to the indispensable
stimulation of our economies,” Hollande declared, saying Europe
needed “projects, solidarity and growth”.