Last-Ditch Talks on Forming Cabinet in Greece

Last-ditch talks on forming a new Greek government are under way in Athens as the prospect of fresh elections looms.

The far-left Syriza bloc, which rejects the terms of the EU/IMF bailout, says it will not join any government which will make further spending cuts, the BBC reported.

Another left-wing party is refusing to serve in any government which excludes Syriza, the second-largest party in parliament after the 6 May elections. European markets and the euro fell sharply on Monday.

If the parties cannot reach a deal by Thursday 17 May, the state opening of parliament, new elections will be called.

The leaders of the centre-right New Democracy, Socialist Pasok and moderate Democratic Left parties arrived at the presidential palace shortly after 19:30 local time (16:30 GMT) on Monday.

However, Syriza's leader Alexis Tsipras rejected the invitation from the Greek president to join the coalition talks, saying he would not be a party to what he called a crime.

Failure would mean fresh elections which, polls suggest, could usher in a government that turns its back on Greece's bailout.

That could lead the country into a default on its debt and hasten Greece's departure from the euro, our correspondent says.

Syriza opposes any further spending cuts and wants to renegotiate the bailout package of 130bn euros (0bn; ?105bn) agreed with the EU and International Monetary Fund (IMF).

Eurozone finance ministers warned on Monday that Athens must stick to the terms of the bailout if it wants to receive further injections of funds to stave off state bankruptcy and avoid leaving the euro.

"It is not about being generous with regards to Greece, it is about what is defensible and credible from an economic point of view," said German Finance Minister Wolfgang Schaeuble.

The Dutch finance minister said Greece had "no option" but to reform, while Austria said Greece would have to leave the EU in order to leave the euro.

"Greece would have to reapply and then we would have membership negotiations and look very closely whether Greece would be able to become a member at all," Austrian Finance Minister Maria Fekter said.

A majority of Greek voters backed anti-austerity parties in the elections earlier this month. As well as Syriza, these include the Democratic Left, the KKE (Communists) and the far-right Golden Dawn.

Pasok and New Democracy, which signed up to the bailouts and had previously dominated Greek politics for decades, saw their combined share of the vote drop from about 77% to about 33%.

Recent opinion polls suggest Syriza's support has increased since 6 May and it could come first in any new election.

One poll commissioned by the Eleftheros Typos newspaper and published on Monday showed 20.5% of support for Syriza, compared to 19.4% for New Democracy and 11.8% for Pasok.

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