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Market fears over new Greek turmoil

Greece's Left Coalition party get an historic chance to form a government opposed to the country's EU/IMF bailout.

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GREECE faces the prospect of repeat elections after an anti-austerity protest vote at the weekend left little hope that any party could form a governing coalition.

Political leaders were due to meet for a second day overnight in a bid to form a government as the prospect of the nation leaving the eurozone loomed large.

New Democracy leader Antonis Samaras gave up his bid to forge an agreement after nearly six hours of talks in Athens on Monday. The attempt to form a government has now passed to Alexis Tsipras, the head of Syriza, the second-biggest party, which has vowed to cancel the bailout terms. Mr Tsipras was due to meet Greek President Karolos Papoulias

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Gave up bid ... New Democracy leader Antonis Samaras. Photo: Bloomberg

last night.

"I tried to form a coalition government with two goals: that the country remain in the euro, and bailout policies change to include growth measures," Mr Samaras said. "I did what I could to get a result but it was not possible. As such, I have informed the President of the republic and handed back the mandate."

The conservative New Democracy party's sharply reduced vote of 18.85 per cent in the weekend election made it the largest party, but Monday's meetings between Mr Samaras and other party leaders failed to break the stalemate.

The nationalist Independent Greeks and the Communist party refused even to meet with him, while Mr Samaras had already ruled out dealing with the neo-Nazi Golden Dawn.

The leftist parties have said they will try to form their own coalition, after an electorate fed up with two years of tough austerity measures boosted their parliamentary presence.

Mr Tsipras has said he would seek a left-wing coalition to reject the "barbaric" measures of the loan agreement that saved Greece from fiscal collapse.

He has said he would tax wealth to help the poor.

The parties opposing Greece's loan agreement with the EU and the IMF, the so-called memorandum, can muster a narrow 151-deputy majority in the 300-seat Parliament.

The problem is they are from the far-left and the far-right: their own differences preclude a deal.

The political uncertainty injects a new element of unpredictability into the eurozone crisis, possibly casting Greece's loan agreement with its foreign creditors into doubt, with a requirement pending to cut $US15 billion ($A14.75 billion) from the budget in June.

With the likelihood that a fiercely anti-austerity crowd will dominate the next Greek Parliament, some investors think it is only a matter of time before the country reneges on the promises it made of deep spending cuts and higher taxes to secure the bailout.

If no party can form a government by May 17 new elections will be called but political deadlock is the last thing Greece needs.

The country is in its fifth year of recession with unemployment at 20 per cent.

"Greece will have to learn to form coalition governments during periods of crisis such as this," said political analyst Thomas Gerakis.

AFP, NEW YORK TIMES