Greek president calls talks in final bid to avert new polls

Greece's president will meet political party chiefs on Sunday in a final attempt to get them to agree to a coalition after inconclusive elections that have raised fears of a Greek eurozone exit.

President Carolos Papoulias "will summon party leaders in a bid to form a government that will enjoy the backing of the parliamentary body that emerged from general elections on May 6," his office said in a statement Saturday.

The political impasse must be overcome by Thursday, when parliament convenes, or new elections will have to be called in June.

The leaders of the conservative, radical left and socialist parties, which took the top three places in last weekend's polls but who all failed to build a coalition this week, will see Papoulias at 0900 GMT Sunday.

The president will later meet separately with heads of smaller parties elected to parliament, including the neo-Nazi Golden Dawn, his office said.

Papoulias on Saturday said there were "grains of optimism" that a coalition could be formed between the conservatives, the socialists and a small pro-European leftist party, according to his office.

"Things are rather difficult," he told socialist leader Evangelos Venizelos, noting that Greece needs to be represented at a eurozone finance ministers' meeting on Monday, a NATO meeting on Thursday and an EU summit on Friday.

Venizelos told Papoulias that the three parties -- New Democracy, Pasok and Democratic Left, who have a total of 168 deputies in the 300-seat parliament -- could form a temporary two-year government to keep Greece in the euro.

The goal would also be to "drastically" improve the loan deal with the European Union and the International Monetary Fund, he added.

But the Democratic Left has previously said it would not join a government made up of only Pasok and New Democracy and which did not include Syriza, the radical leftist party that opposes the 240-billion-euro (311 billion dollar) EU-IMF bailout for Greece.

And Syriza on Saturday refused to budge.

"This is an attempt to continue the politics of the bailout," Syriza said.

Two new opinion polls have shown that Syriza could even emerge as the victor if new elections are held next month.

A Metron Analysis poll published in Saturday's Ependytis weekly gave Syriza 20.2 percent of the vote. And the inclusion of undecided voters would further boost the leftists to 25.5 percent, the pollster said.

One in two respondents said Greece should be run by a centre-left government and 67 percent said they would pick the same party as last Sunday.

The country's international creditors have warned that no new loan payments will be forthcoming if it falters on structural reforms required to put the Greek economy in order after decades of overspending by the state.

A new warning came on Saturday from paymaster Germany, whose central bank chief Jens Weidmann said: "If Athens doesn't keep its word, it will be a democratic choice.

"The consequence will be that the basis for fresh aid will disappear."

And he criticised politicians such as French president-elect Francois Hollande who call for growth spending rather than debt management to kickstart Europe's sluggish economies.

Weidmann said: "I know the new buzzword is 'growth'.... All experience has shown that too much debt is a handicap to growth. To combat debt with more debt just will not work."

Deeply indebted Greece is torn over the tough austerity measures imposed as conditions for EU-IMF bailouts, and the crisis has raised the spectre of it defaulting and even leaving the 17-member eurozone.

Voters last Sunday punished the mainstream parties and left a fractured political landscape amid intense EU pressure over Greek finances.

Pasok and New Democracy pushed through the austerity measures in the previous coalition government but failed to even win a majority between them in the elections.

Brussels on Friday revised downwards its economic forecasts for the country at the epicentre of the eurozone debt crisis.

The European Commission said the economy is expected to contract by 4.7 percent 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.

Greece has already committed to finding by June another 11.5 billion euros in savings to be made over the next two years. It also needs to redeem 435 million euros in maturing debt on May 15.

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