Final push for Greece government falls to president

12 May 2012 Last updated at 10:22 GMT

Greek President Karolos Papoulias is preparing to hold talks with party leaders in an attempt to create an emergency government.

Greek President Karolos Papoulias, right, faces a difficult challenge to unite deeply divided parties

The socialist Pasok party became the third bloc to fail in coalition talks, and leader Evangelos Venizelos formally returned the mandate to the president.

If the president's bid fails, another election will have to be held.

Last Sunday, voters backed parties opposed to Greece's bailout deal that requires deep budget cuts.

Greece's political turmoil has raised the possibility that it could default on its debts and be forced out of the eurozone.

The president is expected to try to pressure parties into a government of national salvation - but the BBC's Mark Lowen in Athens says he is unlikely to succeed.

The process could take days.

Mr Venizelos abandoned efforts to form a new government on Friday, and met the president on Saturday morning to confirm his decision.

He had held talks with centre-right New Democracy leader Antonis Samaras, whose party came first in the election, but could not find a third partner to give them a majority in parliament.

"I hope that during the negotiations chaired by Mr Papoulias everyone will be more mature and responsible in their thinking," Mr Venizelos said.

New Democracy also failed to form a coalition earlier in the week, as did the left-wing bloc Syriza, which came second in the election.

Austerity 'denounced'

Syriza firmly rejects the terms of last year's EU-IMF bailout, which requires tough austerity measures in return for loans worth 130bn euros ($170bn; £105bn).

Its leader, Alexis Tsipras, said on Friday he could not join any coalition that intended to implement the bailout deal.

"The rejection of this plan does not come from Syriza but was given by the Greek people on the night of the election," he said.

"The bailout austerity has already been denounced by the Greek people with its vote, and no government has the right to enforce it."

Last Sunday's election revealed the depth of anger against the austerity measures by Greek voters

Analysts say Syriza could be hoping for another election after one opinion poll put them in first position in any new ballot, albeit without an overall majority.

Meanwhile Germany has reiterated that Greece's exit from the eurozone would have dire consequences, and urged Athens to continue its deep budget cuts.

"For Greece the consequences would be much more grave than for the rest of the eurozone," said Jens Weidmann, head of Germany's central bank.

The Bundesbank chief told the Sueddeutsche Zeitung newspaper that Greece must continue its austerity reforms to justify further loans from the international community.

"If Athens does not stand by its word, then that's a democratic decision. The result is that there is no more basis for further financial aid," he said.

Sunday's election saw a backlash against Pasok and New Democracy, the two parties that agreed the terms of the latest bailout.

The once-dominant Pasok, which was seen as the architect of austerity, came third with just 41 seats in the 300-seat parliament.

The Greek crisis is continuing to create unease is global financial circles.

The Fitch ratings agency warned that if Greece did leave the euro, it would probably place all 16 remaining euro nations' sovereign ratings on "rating watch negative" - meaning they would be in danger of being downgraded.

"A Greek exit would break a fundamental tenet underpinning the euro - that membership of EMU [Economic and Monetary Union] is irrevocable," Fitch said.