Markets slide as Greek reassurances fail to impress

EUROPEAN markets fell yesterday amid fears that debt-stricken Greece may have to use the safety net supplied by the European Union and the International Monetary Fund.

Greek bonds and banking stocks took a pounding, while shares closed lower in the UK, France and Germany. London's FTSE 100 index was almost 1 per cent lower at 5,712.7.

The Greek government struggled to reassure markets that it could stay solvent after its borrowing costs surged for the third day in a row, reaching a record high since Greece joined the euro.

Scepticism at a dearth of details surrounding the EU and IMF lifeline continued to pile pressure on a country already struggling to cover its wide fiscal gap and huge public debt load.

Chris Pryce, senior Greece analyst for rating agency Fitch, said Athens' only choice now was to ask for help.

He added: "Despite everything the EU and the eurozone have done, there is still a lack of clarity, and confusion about what they intend to do, when they intend do it and how much would be involved.

"It is now up to the Greek government to go to the EU and IMF and ask for the cash and the support."

Greece's government has pledged to cut its public finance deficit by almost one third to 8.7 per cent of gross domestic product this year. Reluctant to give in to the pressures, Greece insists it prefers to borrow from markets and will use the EU/IMF safety net agreed only as a last resort, a call it repeated yesterday.