Greece got no quarter on the markets yesterday as its borrowing costs soared with investors losing faith in an EU-IMF deal to help Athens manage its debts despite the premier pledging faster reforms.
For the second time this week, the return on Greek 10-year bonds - a key sovereign debt instrument - jumped above seven per cent, beyond what Greece can sustain in its ongoing effort to raise billions of euros by next month.
The yield on the benchmark Greek 10-year bond jumped to a record high of 7.176 per cent around midday but then fell back slightly to 7.161 per cent, up from 6.976 per cent late Tuesday. Bond yields usually only change incrementally.
The euro fell as IMF experts began an advisory mission to help Athens enact painful budget cuts that have already sparked two general strikes while a key union warned of further action this month.
The Adedy union representing nearly 400,000 Greek civil servants called for strike action "between April 20 and 30" against government austerity measures.
"Employees, pensioners and the unemployed are shouldering ... the cost of a crisis which ... capital created and is speculating on," it said.
Prime Minister George Papandreou meanwhile urged his ministers to work harder "to implement the great changes as fast as possible."
Mr Papandreou said the country faced a difficult road ahead but Greece could only fully restore its credibility on the financial markets and with the EU if it could show it was tackling its problems seriously.
Ministers should ignore all the rumours swirling around in the markets and concentrate on the job at hand, he said, according to a statement issued by his office.
The deteriorating climate also spooked Greek banks, with Bank of Greece governor George Provopoulos telling the finance ministry the country's four main lenders had applied to join a state support scheme.
National Bank, Eurobank, Alpha Bank and Piraeus Bank asked for guarantees worth €15 billion under a €28-billion support scheme put in place by the conservative government in late 2008, semi-state agency ANA said.
A finance ministry official said the government had already decided to extend the bank support scheme by six months.