Leftwing Greek Prime Minister Alexis Tsipras threw down an open challenge to international creditors yesterday by halting privatisation plans agreed under the country’s bailout deal, prompting a third day of heavy losses on financial markets.

A swift series of announcements signalled the newly installed government would stand by its anti-austerity pledges, setting it on course for a clash with European partners, led by Germany, which has said it will not renegotiate the aid package needed to help Greece pay its debts.

Tsipras, who was congratulated by US President Barack Obama in a phone call for his decisive election victory on Sunday, told the first meeting of his Cabinet members that they could not afford to disappoint voters.

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After announcing a halt to the privatisation of the port of Piraeus on Tuesday, for which China’s Cosco Group and four others had been short-listed, the government indicated it would put the whole programme on hold.

It said it would halt the sale of stakes in the Public Power Corporation of Greece, Greece’s biggest utility, and refiner Hellenic Petroleum and put other planned asset sales of motorways, airports and the power grid on ice.

It also plans to reinstate public sector employees judged to have been laid off unfairly, including a group of finance ministry cleaners whose case attracted publicity last year, and announced rises in pensions for retired people on low incomes.

Uncertainty over the new government’s relations with the European Union went beyond economic policy. A day before the EU is expected to extend sanctions against Russia for six months, Greece’s energy minister said the country was against sanctions. Athens had already dissented over a joint statement from the bloc on Ukraine on Tuesday.

General view of Greece’s largest port in Piraeus near Athens yesterday. Greek Prime Minister Alexis Tsipras halted privatisation of Greece’s biggest port on Tuesday. Photos: Reuters

Tsipras, who met Russia’s ambassador to Athens on Monday and the Chinese envoy the next day, told ministers that the government would not seek “a mutually destructive clash” with creditors. But he warned Greece would not back down from demanding a renegotiation of debt.

“We are coming in to radically change the way that policies and administration are conducted in this country,” he said.

Financial markets have taken fright. Greek bank stocks plunged more than 26 per cent yesterday, taking their cumulative losses since the election to over 40 per cent.

The overall Athens stock market fell over nine per cent, while Greek five-year government bond yields hit around 13.5 per cent. This marked their highest level since a 2012 restructuring which wrote off a large proportion of Greek debt held by private investors.

Reflecting the concern, Standard and Poor’s cut its outlook on Greek sovereign debt to negative from stable. Newly appointed Finance Minister Yanis Varoufakis, who tomorrow meets Jeroen Dijsselbloem, head of the eurozone finance ministers’ group, said negotiations would not be easy but he expected they would find common ground.

“There won’t be a duel between Greece and Europe,” he said, at his first meeting with reporters since taking office.