Sources: Greece To Go Back To Polls In June

RELATED QUOTES

SymbolPriceChange

Greece is facing another round of elections on June 17 after the country's main parties repeatedly failed to form a coalition government, Sky sources have said.

The president will hold last-ditch talks on Sunday in a bid to form an emergency government following a third failed attempt at joint leadership.

But it now seems brinkmanship will remain in the way of a successful coalition.

The country has been under pressure to implement huge budget cuts in order to meet conditions necessary to receive its IMF (Berlin: MXG1.BE - news) -EU bailout and stay part of the eurozone.

Legislative elections last Sunday saw voters punish the mainstream parties amid intense EU pressure over Greek finances.

On Friday Socialist Pasok leader Evangelos Venizelos became the latest to fail to form a government after the radical leftist party Syriza refused to join a pro-austerity coalition.

Mr Venizelos was the third party leader who had tried and failed to cobble together a government after the inconclusive elections.

Greek president Karolos Papoulias had been expected to urge party leaders to form a government of national salvation. They had until Thursday to come to an agreement before new elections would be called.

Mr Venizelos had been hoping to win the support of Syriza, a party deeply opposed to the terms of the 240 billion euro EU-IMF bailout and which surged to second place in Sunday's vote.

Another possible ally, the small Democratic Left party, had earlier said it would not join a government made up of only Pasok and the conservative New Democracy party that did not include Syriza.

Previously, both Syriza and the New Democracy party failed in their own attempts to assemble a coalition government.

German leaders warned on Friday that Athens could expect no more money without reforms and also suggested that the eurozone would cope if the cash-strapped country left the 17-member currency union.

Greece has already committed to finding in June another 11.5 billion euros in savings over the next two years. It also needs to redeem 436 million euros in maturing debt on May 15.

Brussels has revised downwards its economic forecasts for the country, which is at the epicentre of the eurozone debt crisis.

The European Commission said the economy is expected to contract by 4.7% this year and see zero growth next year.

Fitch credit rating agency warned that the emergence of a Greek government "unwilling or unable to abide by the terms of the current EU-IMF programme would increase the risk of Greece leaving the eurozone".

"If they are required, the re-run elections will therefore be a critical event for both Greece and for the eurozone," it said in a note.