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Greece postpones austerity talks

Austerity talks have been pushed back for a day, despite intense pressure from the European Union for a speedy agreement so the country can avoid a default next month.

ATHENS // Austerity talks set for late yesterday between Greece's coalition party leaders have been pushed back for a day, despite intense pressure from the European Union for a speedy agreement so the country can avoid a default next month.

The prime minister's office said the delay is to allow completion of separate negotiations between the prime minister, Lucas Papademos, and representatives of Greece's bailout creditors, who will first meet the country's finance minister, Evangelos Venizelos.

Leaders of the three parties in Mr Papademos's coalition publicly oppose steep cuts in private sector pay demanded by the eurozone and International Monetary Fund, which have angered Greek unions who called a general strike for today.

Creditors also want deep spending cuts in defence, health and social security, as well as layoffs of civil servants.

Mr Papademos's office said party leaders agreed in a five-hour meeting on Sunday to cut 2012 spending by 1.5 per cent of gross domestic product - about €3.3 billion (Dh15.8bn) - improve competitiveness by slashing wages and non-wage costs, and recapitalise banks without nationalising them.

But the parties have disagreed on the details.

The government needs support from the majority Socialists, the Conservatives and the small right-wing populist Laos party to seal a deal for a €130bn bailout, coupled with a drastic writedown in the country's privately held debt. Both agreements have to be approved by parliament.

Without either deal, Greece will be forced to default on its debt next month as it lacks the cash for a €14.5bn bond repayment due on March 20.

"While we still believe that a voluntary Greek debt restructuring deal and further EU aid will be forthcoming, the risks of a more disruptive scenario have probably increased," said Vassili Serebriakov, an analyst at Wells Fargo Bank.

Earlier yesterday,the European Commission spokesman Amadeu Altafaj Tardio said Greece is already "beyond the deadline" to end the talks and should reach conclusions "around now."