Eurozone leaders keep lid on Greece’s debts

Eurozone ministers threw a lifeline to Greece last night as they scrambled to prevent financial chaos from spreading further.

The monthly meeting of 17 countries was dominated by attempts to keep Greece afloat and find enough money to coat a veneer of credibility over Europe’s rescue fund.

It came on the third day in a row that Italy has taken a beating in the bond markets, with investors growing increasingly wary of that country’s chances of avoiding default.

The finance ministers approved the next instalment of the Greece’s bail-out loan – €8 billion (£6.8bn). Without that money, Greece would have run out of cash before Christmas, unable to pay employees or provide services.

The instalment is part of a €110bn (£94bn) bail-out from the eurozone and the International Monetary Fund that Greece has been dependent on since May 2010.

The new cash came after the EU received letters from Greek political leaders pledging tough new austerity measures.

Meanwhile, Italy was forced to pay an excruciatingly high interest rate on an auction of three-year debt. The 7.89 per cent rate was nearly three percentage points higher than last month, an enormous increase. The auction raised €7.49 billion (£6.4bn).