Thousands protest in Greece at expected austerity measures

Tens of thousands of protesters gathered in central Athens and other Greek cities today for May Day rallies fuelled by anger at expected harsh austerity measures needed to secure rescue loans for near-bankrupt Greece.

The government is set to announce more sweeping spending cuts through 2012 to win support for an international loan package worth 45 billion euros this year alone.

The cabinet was to meet Sunday morning to finalise the measures, with finance minister George Papaconstantinou expected to announce them at noon and then immediately fly to Brussels for an emergency meeting of eurozone finance ministers.

The International Monetary Fund has said it will provide the money over three years, along with Greece's partners in the eurozone. IMF and EU negotiators began talks in Athens on April 21 and continued through to Friday.

French finance minister Christine Lagarde said today after a meeting of French government officials that she was confident eurozone finance ministers would approve the package by the end of the weekend. Governments are discussing a package of up to 120 billion euros over three years, she said.

Greece's additional austerity measures are likely to include raising consumer taxes, while docking pensions and public service pay. Unions are furious and called on workers to rally in central Athens today.

"These measures are death. How people are going to live tomorrow, how they're going to survive, I do not understand," said Nikos Diamantopoulos, who was participating in a rally organised by pro-Communist unions.

Union members were marching toward the Athens offices of the European Union and continuing to the US Embassy. Minor clashes broke out between rock-throwing anarchists and police, who responded with pepper spray.

In the northern Greek city of Thessaloniki, where more than 5,000 people demonstrated, anarchists briefly clashed with police and smashed a few storefronts and ATMs.

Conservative opposition party New Democracy and the right-wing populist LAOS have been critical of the government but are seen as likely to support the package of measures. Left-wing parties have vowed to escalate protests.

"The Greek people do not owe anything to anybody. Those who have brazenly robbed public money and pension funds," Left Coalition leader Alexis Tsipras told reporters at one of the Athens rallies.

Accountant Virginia Kalapotharakou, who joined striking seamen and dockworkers rallying in the port of Piraeus, called the potential measures "very reactionary".

"They're trying to do away with all the rights we gained through struggles in previous years," she said.

A default would be a serious blow to the euro currency and could hit Greek and European banks that invested in Greek government bonds. The bailout is designed to prevent that and to keep the Greek crisis from spreading to other countries that use the euro.

Greece spent freely for years and ran up debt equal to 115% of gross domestic product. It has been effectively shut out of bond markets to refinance its debt pile because investors fear default and are demanding high rates of interest the government says it cannot pay.

Signs that the help will soon be approved have calmed markets, which previously pushed Greece's cost of borrowing to untenably high levels high as EU and German officials showed little urgency in addressing the problem.

On Friday the interest rate gap, or spread, between Greek 10-year bonds and their benchmark German equivalent narrowed to 6.20 percentage points, from a staggering 10 points Wednesday.

But Athens was in for more bad news as credit agency Moody's Investor Services downgraded the debt rating of nine Greek banks: National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank, Emporiki Bank of Greece, Agricultural Bank of Greece, General Bank of Greece, Marfin Egnatia Bank and Attica Bank.

Moody's said the banks' might face further downgrades - a move that would come alongside Moody's continuing review of the country's sovereign debt rating.

On Thursday, the agency confirmed that it was awaiting to see details of an EU-IMF rescue package before a possible revision of Greece's credit rating, but that a "multi-notch downgrade" remained likely.