Greek socialists fail in last-ditch bid to build government

Greece's socialist leader admitted on Saturday he had failed in a last-ditch bid to form a government, taking the nation a step closer to repeat elections as it faces increased EU pressure over its finances.

Pasok chief Evangelos Venizelos's announcement came after the key radical leftist party Syriza refused to join a pro-austerity coalition with the socialists and conservatives, paving the way for weekend talks hosted by the president to try to stitch together an emergency unity government.

The latest twist in the tortuous political drama came as EU paymaster Germany threatened to cut off the country's loan lifeline and hinted that the crisis-ridden eurozone could get along without Greece.

Venizelos was the third party leader who tried and failed to cobble together a government after inconclusive elections Sunday that saw a backlash against painful austerity measures that have triggered sometimes violent protests.

"I am going to inform the president of the republic tomorrow (Saturday) and I hope that during the meeting with Carolos Papoulias, each party will assume its responsibilities," Venizelos told reporters in Athens.

If the parties cannot agree a compromise by next Thursday, new elections will have to be called.

Venizelos had been hoping to win the support of Syriza, a party deeply opposed to the terms of the 240 billion euro (311 billion dollar) EU-IMF bailout and which surged to second place in Sunday's vote.

"It is not Syriza which is rejecting (joining a coalition with the socialists and conservatives) but it is the verdict of the people of Greece," said party chief Alexis Tsipras.

Earlier, another possible ally, the small Democratic Left party, said it would not join a government made up of only Pasok and the conservative New Democracy party that did not include Syriza.

Earlier this week both Tsipras and New Democracy leader Antonis Samaras failed in their own attempts to assemble a coalition government.

German leaders warned today that Athens could expect no more money without reforms and also suggested that the eurozone would cope if the cash-strapped country left the 17-member currency union.

Greece has already committed to finding in June another 11.5 billion euros (USD 15 billion) in savings over the next two years.

It also needs to redeem 436 million euros in maturing debt on 15^th May.

The political deadlock saw the Athens stock exchange plunge 4.5 per cent on Saturday after closing up 4.19 per cent on Friday.