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Greece: Papademos joins coalition talks

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ATHENS, Greece (AP) — Former European Central Bank Vice President Lucas Papademos on Thursday joined Greek political leaders at powersharing talks to form a new government, in a strong indication that he’s being lined up to be the country’s new prime minister.

Papademos is considered the front-runner to lead a new 15-week coalition government, tasked to secure continued bailout funding and a new (euro) 130 billion ($177 billion) rescue package for Greece from eurozone partners and the International Monetary Fund.

Papademos joined the talks, two hours after the meeting started between Prime Minister George Papandreou and opposition leader Antonis Samaras. Papandreou has promised to quit when the coalition deal is reached.

Greece is under growing international pressure to hammer out a coalition deal that would likely run the country until late February, after ratifying and negotiating details of the new debt deal.

The talks have repeatedly stalled since Papandreou and Samaras made the historic Sunday night commitment to forge a unity government. The markets want clarity soon so the new government can secure bailout cash to avoid an imminent bankruptcy.

Greece’s deliberations over the past few days have taken a backseat to developments in much-bigger Italy where Premier Silvio Berlusconi has announced his intention to resign soon after a new package of economic reforms are passed. But his announcement has done to little to assuage market concerns that Italy is facing a Greek-style economic crisis and the country’s borrowing costs have shot through the roof.

Thursday’s meeting, convened by Greek President Karolos Papoulias, was also attended by the leader of the rightist LAOS party Giorgos Karatzaferis.

Socialist backbenchers had pressed Papandreou to step down after his proposal to hold a referendum on the new debt deal — a plan that was swiftly withdrawn after an angry reaction from world markets and EU leaders.

Late Wednesday, a group of Socialist deputies expressed fierce opposition to reports that parliament speaker Philippos Petsalnikos was to be named as coalition prime minister, state-run NET reported.

The new administration’s immediate aim will be to secure a new European debt deal and ensure Greece receives the vital next (euro) 8 billion ($10.9 billion) installment of its existing (euro) 110 billion EU-IMF bailout fund. Without the loan, the country faces a catastrophic default within weeks. Elections are then expected to be held in February.

Despite three days of wrangling and intense European pressure, Greece’s main parties have been unable to agree on who will lead the new government, which is expected to only be in power for a few months before leading the country to early elections in February.

"This is the third time I’m coming here for (this) issue, and I hope it’s the last," Samaras said as he arrived for the meeting.

The turmoil has led to intense concern on markets and international pressure for a quick resolution.

"I believe that many lenders, many investors actually expect something to happen to give political clarity," said IMF chief Christine Lagarde during a visit to Beijing. "It’s much needed in Greece, it’s much needed in Italy. There is clearly some rumors, trepidation, expectations. No one really understands who is going to come out as the leader, and I think that confusion is completely conducive to volatility."

The new debt deal worth (euro) 130 billion ($177 billion) in aid would also see private bondholders cancel 50 percent of their Greek debt holdings.

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Associated Press writers Derek Gatopoulos in Athens and Joe McDonald in Beijing contributed.

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