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New Democracy Claims Greece Election Win

(c) Sky News 2012

The winning party in the Greek election is scrambling to form a coalition government, as the second-place party refuses to join in.

Greek voters decided to stick with the euro in an election which narrowly handed victory to the pro-bailout party, the centre-right New Democracy.

But the party only secured 29.7% of the vote, meaning it has to cobble together a coalition to achieve a working majority in the 300-seat parliament.

After receiving a mandate to start power-sharing talks from President Karolos Papoulias, the party's leader Antonis Samaras said he would meet the leaders of all parties "that believe in Greece's European orientation and the euro".

But the Syriza party - which came second in the election, receiving 26.9% of the vote - said it refused to join a coalition following a meeting with New Democracy.

Speaking after his discussion with Syriza's leader Alexis Tsipras, Mr Samaras said he would persist in his power-sharing effort because debt-crippled Greece is in "immediate" need of being governed.

The conservative party, which won 129 seats in the election, is embarking upon talks with various smaller party leaders.

The most likely pro-bailout coalition, however, would see them make a deal with socialist party Pasok, which won 33 seats. Together, they would have a majority of 12 seats.

Pasok's leader, Evangelos Venizelos, called for the swift formation of a new coalition government but did not say whether he had agreed to join after talks with conservatives.

"The country needs a government right away and the negotiations must be wrapped up tomorrow," he said.

He had previously said: "There is not one day to lose. There is no room for party games."

Six (SNP: ^SIXY - news) weeks ago Mr Samaras attempted to coax political enemies into a government of "national salvation" but failed.

If he again fails to reach the number of MPs (BSE: MPSLTD.BO - news) required to secure a majority within three days, the task will fall to the Syriza party.

New Democracy MP Notis Mitarachis told Sky News he is optimistic about the chances of his party forming a coalition.

"I am hopeful there will be a pro-European government that will be able to improve the memorandum, but at the same time ensure that we remain fully committed in the eurozone," he said.

He stressed that his party would push for changes to the conditions of Greece's bailout.

The outcome of the election appeared to provide respite to some EU leaders, but Germany has stressed that it expects the next Greek government to stick to the terms of its bailout agreement.

Chancellor Angela Merkel was the first European leader to phone and congratulate Mr Samaras, saying she would "work on the basis that Greece will meet its European commitments".

Germany's foreign minister, Guido Westerwelle, said his country was willing to discuss the time-frame of the austerity programme.

But other German officials, who did not want to be named, said his remarks were not representative of the government's line. 

In a victory speech in Athens, Mr Samaras called for a government of national unity.

He said: "There will be no more adventures; Greece's place in Europe (Chicago Options: ^REURUSD - news) will not be put in doubt, the sacrifices of the Greek people will bear fruit."

Prime Minister David Cameron, who postponed leaving for the G20 summit in Mexico to see who won the election, said a "very bad crisis" had been avoided.

The leaders of Italy and Spain - two countries at the centre of fears over contagion in the debt crisis - welcomed the election result as good news for Europe.

Italy's prime minister Mario Monti said: "This allows us to have a more serene vision for the future of the European Union and for the eurozone."

Spain's Mariano Rajoy described the outcome as "good news for Greece, very good news for the European Union, for the euro and also for Spain".

And US President Barack Obama said the outcome the election showed a "positive prospect" for the formation of a Greek government that could work well with international partners who are helping it address its debt crisis.

New Democracy is committed to keeping Greece within the euro and has vowed to negotiate with Greece's creditors to ease the bailout conditions and try to boost economic growth.

Syriza had promised to rip up the current agreement - a move many believed would force Greece to leave the eurozone.

The reaction of the financial markets to the outcome of the election is being closely watched, as fears by investors of a Greek exit from the eurozone look set to ease.