Greek bailout deadline looms with no sign of a deal to stop it hurtling into default

Financial markets have slid into the red as a crucial €130billion bailout to save Greece from default hung in the balance today.

Greek politicians are reportedly divided ahead of a crunch deadline to
come up with a robust enough reform package to persuade eurozone and IMF
supremos to release much-needed funds.

The debt-laden country must come up with €14.5billion of debt repayments in
March.

And without the massive second bailout – and a related debt
reduction deal with private bondholders that is still not settled
despite weeks of talks – Greece is heading for a catastrophic default
that would rock the financial system.

Crunch talks: Greek Prime Minister Lucas Papademos and fellow coalition leaders are trying to agree an offer to satisfy eurozone and IMF demands and release vital bailout funds

Wary traders sent the FTSE 100 some 14.1 points lower to 5,886 in early trading. It's a similar picture on the continent where the German DAX is down 16.4 points at 6,750.3 and France's CAC 40 is off 37.3 points at 3,390.7.

The euro is also down today at $1.31 against the U.S. dollar – although this is still above the key $1.30 level closely watched by markets – and at 0.83 (€1.21) against the pound.

Michael Hewson senior market analyst at CMC Markets said: 'Greece’s finances remain the main focus of market concern and the weekend didn’t appear to bring the much promised for resolution any closer, with still no real signs of an imminent agreement on the new €130billion bailout that the country needs to avoid a default in March.

'There had been talk of some form of tentative agreement between Greek prime minister [Lucas] Papademos and other party leaders on how to boost economic competitiveness, however this hasn’t been confirmed with the meeting due to reconvene later today.

'As if to highlight the difficulties faced by the politicians the two biggest unions in Greece announced plans for a 24-hour strike on Tuesday, in protest at any further cuts to pensions and the wages.'

Chris Tedder of foreign exchange trading firm Forex.com said: 'Greek private sector debt talks have taken a backseat to crunch talks on the next aid tranche.

'It appears that Greece’s national unity government has failed to reach an agreement on further savings to satisfy the troika’s [officials representing the European Commission, IMF and European Central Bank] demands.

'Until now, Athens’s requests to have the terms of the next bailout package eased have fallen on deaf ears amongst the troika, and the situation is being compounded by a lack of cooperation between Greek politicians.'

Daily Investor Tips for commercial investors

Greek bailout deadline looms with no sign of a deal to stop it hurtling into default