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Venizelos makes last-ditch attempt at government

Greek Socialist leader Evangelos Venizelos will make a last- ditch attempt to form a government on Thursday and avoid a new election after voters rejected a bailout deal and pushed Greece into a political crisis, Reuters reported.

Chances are slim Venizelos can clinch a deal after both the conservatives and leftists tried and failed to cobble together a coalition in three days of talks following Sundays election, when voters spurned big parties and their austerity policies.

The political deadlock prompted European threats to eject Greece from the euro, while impatient governments withheld part of the latest tranche of rescue funds to be paid to Greece on Thursday.

New elections in 3-4 weeks loom as Athens, due to run out of cash in June, needs to impose fresh measures in exchange for funds.

"I will continue the effort because it is in the nations interest," Venizelos told reporters. "Prolonging this uncertainty only hurts the country and its economy, and in the end, the weakest and the unemployed."

But the mood was somber when radical Left Coalition leader Alexis Tsipras abandoned his efforts after meeting main political leaders and a raft of new groups propelled into parliament by public anger at mainstream parties. The biggest party, New Democracy, tried and failed to form a workable coalition within hours on Monday and there seemed to be little ground for compromise between the pro- and anti-bailout parties, split almost down the middle in the new parliament.

Tsipras demanded that New Democracy and PASOK, which ruled Greece for decades and were ravaged in Sundays poll, tear up the pledges they made in return for the bailout, which they rejected out of hand.

European Central Bank policymaker Ewald Nowotny, said Greece could not be helped if it would not help itself, in a stern warning that euro exit was in the cards.

Most Greeks may oppose the tough terms of a 130 billion euro IMF/EU bailout agreed in February but want to stay in the euro.

European governments kept the country solvent for the moment by agreeing to make a 4.2 billion euros payment on Thursday from the regions bailout fund to enable Athens to meet short term bond redemptions. But, in a sign of growing displeasure at the impasse in Athens, a further 1 billion euros was withheld, probably until next month.

Angela Merkel, leader of euro zone paymaster Germany, said in a newspaper interview that she wanted Greece to stay in the common currency but it must stick to the terms of the bailout.

Many Greeks seemed unfazed by the crisis created by the election, but some expressed alarm.

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