2nd UPDATE: Greek President Takes Over Negotiations To Form Coalition Government

 

--Meeting at 0900 GMT Sunday aims to avoid new elections

--Will also meet with leaders of smaller parties

--Seeks to end political turmoil that has agitated euro zone bloc and international financial markets

ATHENS (Dow Jones)--Greece's president will meet Sunday with the top three party leaders that emerged from May 6 elections in a last-ditch attempt to cobble together a coalition and avoid fresh elections.

"The president 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," the president's office said Saturday.

The leaders of the conservatives New Democracy, Socialists or Pasok and radical-leftist Syriza parties, who all failed to form a government earlier this week, will see President Karolos Papoulias at 0900 GMT.

The president will subsequently meet with heads of smaller parties, including the neo-Nazi Golden Dawn. No schedule was given for the follow-up meetings.

Earlier Saturday Greek Socialist leader Evangelos Venizelos met Papoulias to return a mandate to form a coalition government, representing the third and final attempt by the top three vote-getting parties. There is no time limit set for his consultations with party leaders.

"New Democracy, Pasok and leftist party Democratic Left agree on the need and ability of forming a [coalition] government of pro-European forces," Venizelos said during the meeting he had with Papoulias.

"The participation of [radical leftist Syriza] in this government is a precondition. I have said that to [the party leader Alexis] Tsipras; I have not received a positive response, but I think that this is where you should focus your efforts," he added.

"I can see some bits of optimism; I hope I will contribute in the efforts to form a government," Papoulias replied.

If no deal is reached, the president will call fresh elections, likely to take place in the middle of next month, with radical leftists leading in the polls.

According to a poll Saturday by Kapa Research, Syriza, which received an unprecedented boost and placed second in Sunday's elections, has gained support since the elections and become the country's most popular party.

The Conservatives New Democracy party and the Socialist Pasok, the two previously mainstream parties that backed the country's former coalition government, have seen more erosion of support, a poll published in To Vima newspaper showed.

Syriza would receive 20.5% of votes if elections were held now, up from 16.8% on Sunday, while support for New Democracy fell to 18.1% from 18.85% in the elections, while Pasok would receive 12.2%, down from 13.2%.

So far, Greece's two main political parties-- Pasok and New Democracy --have endorsed a deal with the Democratic Left that would jointly give them control of 168 seats in the country's 300-seat Parliament.

However, Democratic Left has insisted on Syriza's participation. But Syriza so far has refused, with Tsipras maintaining his opposition to the tough reforms and cutbacks demanded by Greece's international creditors in exchange for its EUR130 billion loan agreement.

"The denial to take part in a coalition government is not from Syriza but from the Greek people," Alexis Tsipras said earlier this week. "The [loan agreement] has already been denounced by the Greek people."

The political turmoil has renewed fears that Greece won't be able to implement the reforms demanded by its European partners in exchange for a recent bailout designed to keep the country afloat and part of the euro zone.

Earlier this week, euro-zone governments turned up the pressure on Greece by deciding to hold back part of a scheduled loan payment.

-By Nektaria Stamouli, Dow Jones Newswires; +30 210 373 1775; nektaria.stamouli@dowjones.com

2nd UPDATE: Greek President Takes Over Negotiations To Form Coalition Government - WSJ.com