Greece braces for new election in June

Greece on Wednesday swore in a senior judge as caretaker prime minister who is charged with holding new elections after an indecisive vote that sparked fears over the country's future in the eurozone.

, the head of Greece's top administrative court, was tasked with organising the next general election, which the semi-state Athens News Agency said would be held June 17.

His appointment came after Greek political parties failed to form a coalition government in the days after the May 6 polls.

"I assume this difficult role at a particularly difficult time," Pikrammenos, 67, told outgoing premier Lucas Papademos.

"For the good of the country, there must be calm and order," he said.

A former European Central Bank deputy chief, Papademos had been named in November by a power-sharing coalition to oversee a rollover of nearly a third of Greece's huge debt of over 350 billion euros ($448 billion).

This was part of a new eurozone bailout that could be jeopardised should Greece falter on its promised structural reforms.

"It is particularly important to fulfil the country's international obligations and apply policies that will safeguard trust and stability," Papademos said.

But there is little guarantee that a new vote would produce a viable government.

The left-wing Syriza party, which has threatened to tear up the bailout deal with the European Union and the International Monetary Fund, is a favourite to win after coming second in the May elections.

The party's 37-year-old leader Alexis Tsipras on Wednesday accused the EU and German Chancellor Angela Merkel of "playing poker with European people's lives".

Tsipras told the BBC that if the "disease of austerity destroys Greece, it will spread to the rest of Europe".

Banks were making big profits at the expense of people in Greece, but also in Spain and Italy, who were finding life increasingly hard, he said.

"Therefore the European leadership and especially Mrs Merkel need to stop playing poker with the lives of people," Tsipras said.

Greece's new cabinet will be sworn in at 0700 GMT on Thursday, and parliament will convene an hour after the ceremony.

Greece and the world's financial markets had been anxiously awaiting the date for new polls amid growing fears the cash-strapped nation could be forced out of the 17-member eurozone.

"The country is on a knife's edge," said the Hellenic Federation of Enterprises, one of Greece's main business lobby groups.

News that about 700 million euros ($890 million) had been withdrawn from Greek banks on Monday has stoked tensions, with investors fearful a Greek euro exit would be chaotic for everyone.

Christian Schulz of Berenberg Bank said the withdrawals suggested Greeks were "getting increasingly worried about the country's future in the euro".

He said they "do not indicate panic quite yet. However, this could change soon, so that the central bank would have to step in to save the banks."

The European Central Bank wants Greece to stay in the eurozone, its president Mario Draghi said Wednesday.

Commerzbank analysts said the risk of a "Grexit" -- an uncontrolled Greek default and eurozone exit -- had increased with the news of fresh polls.

Press reaction was subdued, reflecting the feeling that while most Greeks want to stay in the eurozone, they cannot live with more spending cuts which have already triggered strikes and sometimes violent demonstrations.

There was little comfort found in a pledge by German Chancellor Angela Merkel, made alongside new French President Francois Hollande at their first meeting Tuesday, that "we want Greece to stay in the euro".

Merkel said the two European powerhouses were also prepared "to study the possibility of additional growth measures in Greece" if Athens sought them.

But German Finance Minister Wolfgang Schaeuble insisted once again it was not possible to renegotiate the EU-IMF deal, the second in two years aimed at averting bankruptcy.

"Greece must be ready to accept the (EU-IMF) aid," he said. "Those who win the elections will have to decide if they accept the conditions or not."

European Commission head Jose Manuel Barroso made the same point.

"There is no way of changing the commitments taken by Greece and also by the other 16 euro area member states," he said.

The euro tumbled Wednesday to a four-month low of $1.2681 but later recovered to $1.2748, edging up as stock markets steadied in afternoon European trade.

"There is a pervading sense of unease in financial markets," National Australia Bank said, noting "increasing outflows from its (Greece's) banking sector and broader discussion of contagion effects," it said.

"The concern now is regarding contagion. It's not Greece per se that is the problem but the credibility of the euro as a currency."

That contagion effect was showing up most strongly in Spain, struggling to stabilise its banking sector and get its economy growing again, where government borrowing costs were rising sharply.

Spanish Prime Minister Mariano Rajoy, mindful of his own problems, said it would be an "enormous mistake" if Greece were to leave the eurozone.

"It would be bad news and I think we have to guarantee the sustainability of public debt and then all of us comply with our commitments."

New caretaker prime minister Pikrammenos on Wednesday joked that his surname -- which means "embittered" in Greek -- made him uniquely suited for the post.

Newly appointed Greek caretaker Prime Minister Panagiotis Pikrammenos looks on during a swearing-in ceremony in Athens.

Greek President Carolos Papoulias (L) shakes hands with newly appointed caretaker Prime Minister Panagiotis Pikrammenos (R) in Athens. The senior judge was sworn as caretaker prime minister with the sole task of holding new elections in June after an inconclusive ballot on May 6.

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