Greek left-wing coalition leader Alexis Tsipras labeled the country's $130 billion euro ($170 billion) bailout terms "barbaric" and said he would form a government that would demand the terms be reworked, The Daily Telegraph reported.
Tsipras' SYRIZA group finished second in Greece's parliamentary elections Sunday, between the New Democracy and PASOK parties, giving the anti-austerity faction considerable leverage in forming a ruling coalition.
"The public verdict has clearly nullified the loan agreement and pledges sent to Europe and the IMF," the British newspaper quoted him as saying.
The IMF said in a statement Germany is poised for a "domestic demand-led recovery."
"Prospects for a recovery in Germany are favorable, but the outlook is clouded by external risks, especially from stress in a number of euro area economies," the IMF statement said. "The key near-term policy priorities are to allow the transition to domestic demand-led growth to proceed, secure financial stability and help address the challenges facing the euro area."
"As the euro area's largest economy, Germany can play a pivotal role in addressing the challenges posed by the crisis. Articulating more clearly the Economic and Monetary Union's shared vision of an appropriate post-crisis architecture will help in restoring market confidence, in our view. The positive short-run benefits of the necessary implementation of ambitious structural reform agendas in several euro area countries should be complemented with pan-European measures. These could include using EU structural funds and increasing the lending capacity of the European Investment Bank."
The eurozone situation remains precarious with Greece teetering on political chaos, France colliding with Germany on austerity and Spain readying new bank bailouts. If Greece is unable to arrive at a ruling coalition, a repeat general election could occur June 17.
Technocrat caretaker Prime Minister Lucas Papademos, appointed Nov. 11, is to leave office next week, to be followed by another caretaker administration to watch over a fast-deteriorating economy that analysts increasingly fear will go bankrupt in August if it reneges on earlier-made promises tied to deep spending cuts and higher taxes to secure the bailout.
Greece's creditors are to decide in August whether to release another installment of financial aid from the bailout.
Athens faces the prospect of being unable to meet pension, salary and debt commitments next month, the Financial Times said.
A Greek default would lead to problems at the European Central Bank and the International Monetary Fund, which are using taxpayer money to foot most of the bill for the bailout, The New York Times said.
Other countries that lent directly to Greece would also face steep losses, including Spain, which many analysts say could need a financial bailout of its own.
A Greek default could also hurt Germany and France, which are on the hook for a large portion of the bailout bill, the analysts say.
"A Greek eurozone exit is now firmly on the cards," Fidelity Worldwide Investment sovereign debt analyst Tristan Cooper said.
In France, President-elect Francois Hollande promised to roll back Sarkozy administration austerity measures and add measures to stimulate growth. German Chancellor Angela Merkel warned all struggling eurozone countries they must stick to their commitments to international lenders.
Hollande, who has never met Merkel, said his first trip as president would be to Berlin May 16, the day after he is sworn in.
His central campaign pledge was to "reopen the euro's new rulebook."
Merkel insisted during a news conference Monday that, despite Hollande's vows to give "a new direction to Europe," the fiscal pact negotiated with Sarkozy and endorsed by 25 European Union member states was "not negotiable."
She said Hollande would be "welcomed with open arms here in Germany by me."
Merkel has her own electoral problems.
After losing a regional state election Sunday, her Christian Democratic Union party faces another test next weekend in the key Westphalia region.
The euro crisis flared anew in Spain as Prime Minister Mariano Rajoy said his country was ready to inject billions in public money to bail out No. 3 Spanish bank Bankia SA and possibly other ailing banks wrestling with a housing-market collapse.
The announcement Monday was a reversal of policy, with Madrid previously insisting no additional state money would be needed to clean up the country's banking sector.
Bankia Executive Chairman Rodrigo Rato, a former International Monetary Fund managing director, resigned from the bank soon after the news broke, amid growing questions from international lenders about his management since the bank was formed in December 2010 out of a merger of seven Spanish savings banks, or cajas.
Rajoy insisted the bank bailout would not compromise the tough targets set by Brussels to reduce the budget deficit.
Investment managers say Spain's financial system would be at risk if Bankia is not propped up, El Pais reported.
The bank could need as much as $13 billion to clean up its balance sheet, the newspaper said.
Spain -- which said it might save $40 million a year by docking an aircraft carrier -- is struggling to cope with an austerity drive that has contracted the economy 0.3 percent each of the past two quarters and pushed the jobless rate to nearly 25 percent of the workforce.
More than half of Spaniards under 25 are jobless.
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