Guiding Light Fans Riot At G 20 Summit

22.77 Reforms to foster growth, such as changes to the labour market are "urgently" needed in order to put the eurozone back on a sustainable path, the

IMF has said. In a report titled >Fostering Growth in Europe Now

, it said:

Quote Fostering growth is always important; in the euro area it has become urgent.

If implemented correctly, reforms can boost growth by up to 4.5pc, the

IMF added:

Quote There is substantial empirical evidence that structural reforms can lift growth markedly in the medium to long term. Staff simulations show that large-scale labor, product market, and pension reforms, which cut the distance of euro area countries to growth-maximizing benchmarks in half, could boost output by 4½ percent over the next five years. A pan-European approach is important: a quarter of this additional growth is expected to derive from positive cross-country and cross-reform spillovers. But one must be realistic that the near-term impact on growth, as opposed to the effect on overall confidence, will likely be modest.

21.45 US stock markets have closed. The

Dow Jones industrial average finished down 0.2pc, at 12,741.82, while the broader

S&P 500 finished almost flat, at 1,344.78.

21.03 Europe may agree to relax the conditions of Greece's austerity measures, but there will be no major alterations to existing agreement, Eurogroup head

Jean-Claude Juncker has said.

Mr Juncker told German television:

Quote It would send the wrong signal if we made concessions without good reason.

20.43 Leaders of the world's emerging economies are willing to stump up more cash to prevent future crisies, but only in return for more clout at the negotiating table. In a statement released by India, the so-called BRICS of

Brazil,

China,

Russia,

India and

South Africa said they had:

Quote agreed to increase resources available with the International Monetary Fund [to] promote adequate burden sharing amongst IMF creditors. These new contributions are being made in anticipation that all the reforms agreed upon in 2010 will be fully implemented in a timely manner, including a comprehensive reform of voting power and reform of quota shares.

Brazilian president Dilma Roussef, Russian president Vladimir Putin, Indian PM Manmohan Singh, Chinese president Hu Jintao and South African president Jacob Zuma pose for group photo in Mexico on Monday (Photo: AFP)

20.08 Don't expect any solutions from the international junketing in Mexico, writes

Jeremy Warner:

Few G20 meetings are anything other than a waste of space, but this one more so than most, for the latest slowdown in the world economy is something that can only be convincingly dealt with by Europe. And as we already know, Europe is seemingly quite incapable of sorting out the hopeless muddle it has inflicted on itself.

Angela Merkel, the German Chancellor, has welcomed the outcome of the Greek election, but it must have been through gritted teeth. In fact, New Democracy's narrow victory is the worst possible outcome for Berlin. What a relief that Greece has voted to remain in the euro, German policymakers profess in public. Not, they mutter as an aside.

There's virtually no politician in Greece who thinks the austerity of the bailout programme a price worth paying for membership of the euro; they all want to renegotiate the terms to some degree.

The choice made by Greeks was therefore not one of in or out of the euro, but between the outright confrontation pledged by the radical left and the guerrilla warfare of renegotiation promised by the New Democracy leader, Antonis Samaras. This is scarcely going to help matters from a German perspective.

19.36 A pro-bail-out coalition government in

Greece will be formed by tomorrow, according to sources cited by Reuters.

A senior official with the conservative

New Democracy party told the newswire that the country would also ask Europe to spread its €11.7bn austerity drive over four years instead of the current two.

19.13 Here's another chance to watch

David Cameron talking about his sympathy for

German concerns over

Greece:

19.01 Mr Barroso has also insisted that Europe did not come to the G20 summit in Mexico to "receive lessons" on how to handle the economy. When asked by a Canadian journalist "why should North Americans risk their assets to help Europe?" He replied:

Quote Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy.

By the way this crisis was not originated in Europe [...] Seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market.

Oh dear...

18.37 A little more on what

Jose Barroso, the European Union president, had to say earlier. He said that a mission from Greece's international lenders will be sent to Athens as soon as a government is formed there to assess how the bailout programme targets can be achieved. He added that Greece had made impressive budget savings, but failed to deliver needed structural reforms such as privatising state assets.

18.27 The prime minister urged the European Central Bank and the eurozone's strongest economies to do more to deal with the region's financial crisis. The two options are to “try to force down wages and prices at the periphery as fast as they can, or the core of the euro zone has to do more to support the periphery through greater burden sharing,” he said.

18.22 Speaking about the regulation of the banks,

David Cameron said that Britain had taken steps to clean up its banks, as a "vital part of clearing up the mess inherited". He added that the UK had one of largest financial services sector in the world and wanted to make it "one of the safest".

18.09 David Cameron has also lambasted protectionism, saying there is "worrying evidence" of countries putting up trade barriers. He said that keeping trade rules fair was "absolutely vital". He also called on business to tackle poverty by campaigning on issues of trade and openness.

18.03

David Cameron is now addressing business leaders at the G20 summit. He says they have taken steps to make Britain one of the best places in the world to start and grow a business.

He is advertising Britain's business opportunities, saying the country has some "huge underlying strengths", including some of the best universities in the world.

The prime minister has also outlined five key threats to the global economy, including the "muddle-headed" thinking that over-indebted countries can spend their way out of trouble.

He said that "bold action" was necessary to get finances back under control, adding there was an "unequivocal message that deficit reduction and growth are not alternatives, achieving the first is vital to achieving the second".

Speaking about the eurozone, he said that political parties who say they want Greece to stay in the euro need to act accordingly and cannot afford to waste any time.

He added that Britain did not join the eurozone because it did not want to give up sovereignty. But, he added that the eurozone's actions have a "direct impact on our economic fortunes".

17.45 Speaking at the G20 in Mexico,

David Cameron has responded to Angela Merkel's comments that she does not want to see any loosening of Greece's agreed pledges to reform. He said he could quite understand German concerns that tax payers have been asked to put a lot of money into Greece and want "Greece to stick to its side of bargain". "But the truth is everyone in the Eurozone has to take difficult decisions to make the system work properly and ease crisis," he added.

Asked whether he could see the crisis going on for years, he said "I very much hope that won't be the case". He added that if decisive, clear action is taken, we can see the crisis ease. "[The] alternatives are not good," he said.

17.35 Reuters has some further detail on what

Herman Van Rompuy has been saying. He has apparently said that the eurozone is confident that the new Greek government will take ownership of the EU/IMF bailout programme; and that the first priority is to work on integrated bank supervision in the eurozone.

17.28

Herman Van Rompuy, president of the European Council, has been speaking too:

17.25 A little more detail on what

Jose Barroso has been saying at this afternoon's press conference. The EC president has said that he wants a financial transaction tax globally; that Europe must work towards a banking union; and that Greece must implement necessary reforms.

17.22 Richard Blackden, the Telegraph's US Business Editor, has tweeted on the press conference with

Jose Barroso, president of the European Commission:

17.15 President

Barack Obama, who is due to meet Angela Merkel later today, also had this to say on the Greek election:

QuoteI think the election in Greece yesterday indicates a positive prospect for not only them forming a government, but also them working constructively with their international partners in order that they can continue on the path of reform and do so in a way that also offers the prospects for the Greek people to succeed and prosper.

17.10

Standard & Poor's has issued its verdict on the Greek election, saying that it will have no immediate effect on Greece's ratings. But, the agency did add that while the short-term risk of Greece leaving the eurozone may have lessened, it still sees at least a one-in-three chance of its exit in the medium-to-long term.

17.03

Evangelos Venizelos, the leader of Greece's Socialist Pasok party, has said that the country must have a coalition by the end of tomorrow at the latest. Speaking in Athens, Venizelos said that a message of unity must be sent to the Greek people and a message of credibility sent abroad. He described comments from radical leftist leader, Alexander Tsipras, who today refused to join a coalition with the conservatives, as disappointing.

He said efforts should continue to form a government with the widest possible participation, suggesting that Antonis Samaras, the New Democracy leader, use his mandate to call a meeting of party leaders under President Karolos Papoulias tomorrow.

16.51 At the close in London, the

FTSE 100 has managed to sneak up 0.2pc. But Spain's IBEX has tumbled 3pc and Italy's MIB is sharply lower, down 2.9pc.

16.41 Austerity, schmausterity. Here's where

Angela Merkel and

Barack Obama are having their G20 chinwag later on today. It's the

Esperanza resort and if you fancy a night in a beachfront luxury suite, it will set you back $3,500.

16.21 The might of Merkel: traders and market watchers point out that Spanish stocks and the euro have hit their lows of the day as the German chancellor says Greece has to stick to the terms agreed.

16.12 Some flashes coming through from Reuters on comments from

Angela Merkel. She says:

- Expects a common position of Europeans on sustainable growth

- Does not see any reason to speak about a new aid package for Greece on top of the two already agreed

- New Greek government has to fulfull the commitments Greece has made to its international lenders

- Expects quick formation of new, stable government in Greece

- Cannot accept any loosening on agreed reform pledges in Greece after election

16.09 As

we head towards the bell in London,

Ishaq Siddiqi, market strategist at ETX, had this to say on the day's movements

:

Quote Although markets earlier in the morning cheered the pro-bailout Greek election win over the weekend, worries about the implementation on a workable plan with a coalition government that can agree on reforms and austerity is eating away at the market confidence at the moment. Though a global crisis has been averted for now, Greece’s underlying economic problems will continue to rattle market sentiment in the near term. There remains a long hard road full of speed bumps for Greece, and signs of collective political efforts will be the key to building optimism over the country’s future.

As such, nerves will continue to build ahead of the key Eurogroup meeting at the end of June, where policy makers will be under pressure to work on solutions to tame the contagion of the debt crisis spreading to the core and work with Greece on measures to stimulate economic growth.

15.41 European Central Bank Governing Council member

Ewald Nowotny: "Policymakers must avoid repeating "single-minded" focus on austerity that helped bring Nazis to power in 1930s German economic crisis."

15.29 Ed Conway from Sky at the

G20:

Meanwhile the

G20 draft communique has been leaked, according to Reuters. It states that "Euro area countries agree to take all necessary measures to safeguard region’s integrity and stability. The eurozone is urged to find ways to break feedback loop between banks and sovereigns, and the eurozone to work closely with Greek government to ensure Greece remains on reform path and inside eurozone."

Top priority for

G20 remains "strong, sustainable and balanced growth" that reduces unemployment.

15.19 Fitch has released a report entitled Greece and Europe: Back from the Brink, Crisis Unresolved.

Quote The narrow victory of New Democracy in the Greek parliamentary elections means the near-term risk of a Greek disorderly debt default and exit from the euro has fallen. A new government that is supportive of the EU-IMF programme is likely to be in place prior to the EU Leaders Summit on June 28-29.

Consequently, Fitch will not place all eurozone sovereigns on Rating Watch Negative as it had indicated would be the case if a Greek euro exit were a probable near-term event.

The crisis in Greece and the eurozone remains intense. Fiscal austerity and painful structural reform combined with a strong parliamentary opposition led by Sryzia means that the new Greek government is likely to be fragile.

The pace of economic contraction is almost certainly accelerating. The country's liquidity position is fast deteriorating, underscoring the urgency of forming a new government and the resumption of disbursements under the EU-IMF programme. It will be challenging to significantly ease the austerity programme without receiving additional funds, although there is some room for manoeuvre on the financing profile of the existing programme.

While the risks from Greece have fallen for now, the severity of the systemic crisis engulfing the eurozone is unlikely to diminish until European leaders articulate a credible roadmap that would complete monetary union with much greater fiscal and financial integration.

Downward pressure on the sovereign credit profile and ratings of eurozone sovereign governments will intensify so long as a credible path to closer union and a more coherent and united policy response are absent. This includes further boosting the financial backstops against contagion.

15.12 Italian PM

Mario Monti says markets have not been convinced by Greek election.

Bit late isn't he?

15.07 Richard Blackden, the Telegraph's US Business Editor, is at the

G20 Summit in Mexico:

German chancellor Angela Merkel will be making her first statement on the Greek elections at about 4pm UK time. The ranks of the German press are waiting to be ferried to her hotel in the Mexcian resort of Los Cabos for the statement. Merkel - who is the pivotal figure at this summit - then has meetings with Mexican President Felipe Calderon, Chinese President Hu Jintao and US President Barack Obama.

15.02 US homebuilder sentiment up from 28 to 29. Highest since April 2007.

14.55 European Central Bank Executive Board member

Joerg Asmussen says ECB cannot be lender of last resort for governments. Greek election result means yes to reforms, but painful way ahead for Greek government.

14.49 PIMCO founder

Bill Gross:

14.43 Citigroup chief

Vikram Pandit says Greek elections positive for keeping

euro together. Emerging markets are still growing but not immune to European impact.

Meanwhile, Citigroup chief economist

Willem Buiter believes Spain and Italy will both need bailouts:

Quote I still think there will be a program in place that partially funds the sovereign... The domestic authorities [could continue to] lean on the domestic banks... to purchase sovereign bonds at yields lower than they would accept normally... Its' even possible that, if all else fails, the ECB might reopen its least favorite tool at the moment - the SMP programme [of sovereign bond purchases on the secondary market]. [The ECB] could basically focus SMP purchases in limited amounts around the time of sovereign auctions, [effectively rendering them] back-to-back primary market purchases, of course leaning on domestic banks.

14.33 Daniel Hannan MEP:

14.31 US markets have opened.

Dow down 0.3pc,

Nasdaq down 0.5pc,

S&P 500 down 0.3pc.

14.25 White House says there won't be any big euro solution coming out of the G20 in Mexico: "That would happen in Brussels [EU summit on June 28-29], not Los Cabos."

14.20 Reuters is reporting that the EU is readying a plan for a 10 to 15-year bond.

14.14

Spanish 10-year yield intra-day high today is 7.28pc,

Irish intra-day low 7.34pc.

Meanwhile, the yield on the

German one-year note has fallen to -0.004pc.

14.07 Quick update on the markets:

FTSE 100 flat

CAC -0.9pc

DAX +0.1pc

IBEX -2.5pc

MIB -2.7pc

Nicholas Spiro, managing director of Spiro Sovereign Strategy:

Quote There's no such thing as a "market-friendly" Greek election result. There are only varying degrees of market unfriendliness. Yesterday's result is less market-unfriendly for the simple reason that Syriza did not come out on top. Yet even if New Democracy is able to form a coalition government with Pasok and Democratic Left, its mandate for reform will be weak and it will still face considerable social and parliamentary resistance.

14.03 Leader of the New Democracy conservative party

Antonis Samaras (right) greets the head of Greece's radical left-wing Syriza party

Alexis Tsipras earlier today.

13.58 However, European Union competition chief

Joaquin Almunia believes

Spain has no need for a full-blown state bailout in addition to a rescue loan for its distressed banks.

Quote I sincerely do not expect it nor do I believe it. The doors to the markets are open to it and I am sure will carry on being so.

13.53 The Telegraph's

Jeremy Warner:

Dow Jones-WSJ sources say extending

Greek budget goals to 2016 would cost creditors €16bn.

13.51 Michael Hewson of CMC Markets warns

investor highs after Greek election result have worn off.

13.44 Greek

archaeology students hit by state funding cuts are making an online appeal for donations to join excavations in

Iraqi Kurdistan, the state-run Athens News Agency has said.

In a posting on donation website indiegogo.com, the group of

Athens University students have asked for help to cover the €500 plane fare.

"Without wishing to sound like a cliche, everyone knows that times are tough right now," the students said in their posting. "The university cannot cover the cost of our airplane tickets. So please donate and send us there."

13.12 Spain is to sell €2bn to €3bn of 12 to 18-month bonds on tomorrow and €1bn to €2bn of unspecified bonds on Thursday.

10-year bond yields now at 7.225pc, up more than 30 basis points today.

Mike Lenhoff, chief strategist at Brewin Dolphin: "You might have thought that the risk of a Grexit and contagion has diminished but, judging by their action, the markets are not for buying it – just yet."

13.10 Is the

Ireland move the first step to changing

Greece's bailout terms? Surely you couldn't change one without changing them all.

13.04 BREAKING NEWS...

Irish state broadcaster

RTE claims that the

Troika is considering changing the terms of the

Irish bailout to extend repayment schedule from 15 years to 30 years.

13.02 It might be doom and gloom in Europe but at least people at the

G20 in Mexico are having "fun":

Here are members of

Oxfam wearing masks depicting Indian Prime Minister Manmohan Singh, US President Barack Obama and Brazilian President Dilma Roussef.

Those

Oxfam guys really know how to make the most of being in Mexico.

12.53 European Central Bank Governing Council member

Ewald Nowotny says a eurozone meltdown was only avoided by ECB action. "We have been very close to meltdown," he said.

12.48 Samaras now speaking: "We must have a government of national salvation and I want many parties to join. Tsipras won't join. Greece keeps to commitments. Greece needs to have a government soon."

Samaras wants to renegotiate bailout agreement

12.40 The boss of

De La Rue has pulled out of the

G20 Summit at the last minute due to "personal reasons".

Maybe he needs to print some foreign money?

12.30 Meeting between New Democracy leader

Samaras and Syriza leader

Tsipras is over.

Tsipras: "I will not join a coalition government. I told Samaras that it would be a catastrophe to continue with cuts to wages and pensions. Democracy must resist violent acts [two hand grenades were thrown at Skai TV building yesterday]. We have very difficult moments until June 28 [EU leaders' summit]. We now have better [bailout] negotiation opportunities. Greece must take advantage of this. We respect the election result.

"A government must be formed based on New Democracy because that is what the people wanted - but they will be judged by the people. Country must have a government tonight. We will be a powerful opposition, we will control government. Role of opposition is to be critical and responsible. Whoever takes the responsibility to form a government, takes the responsibility to negotiate [bailout]. We will not use mandate if Samaras fails to form a coalition government.

12.26 Economic and Social Research Institute says Irish economy will grow 2.2pc in 2013.

12.19 RBS says

ECB action won't prevent a full bailout of

Spain.

12.16 Olli Rehn, EU Commissioner for Economic Affairs, says financial union will be a core part of rebuilt

eurozone.

Meanhwhile, Portuguese Economy Minister

Alvaro Santos Pereira says his country has liquidity problems.

12.13 David Cameron, in Mexico for the

G20 Summit, has

commented on the Greek election:

Quote The outcome of the Greek election looks clear in terms of a commitment to stay in the eurozone and to accept the terms of the memorandum. But I think those parties that want that to happen can't afford to delay and position themselves. If you are a Greek political party and want to stay in the eurozone and accept the consequences that follow you have got to get on with it and help form a government. A delay could be very dangerous.

12.09 Time for an update on the markets:

FTSE 100 +0.4pc

CAC +0.2pc

DAX +0.7pc

IBEX -1.5pc

MIB -1.5pc

Glenn Uniacke, senior trader at the foreign exchange specialists Moneycorp, said:

Quote Compared with the 'blink and you'll miss it' rally that followed the Spanish bailout, this rally is more worthy of the name. The markets' sense of relief is real, and profound, but doomed to be short.

"Desperately uncompetitive and with scant prospects for growth, Greece's economy remains just as much of a trainwreck as before. The long-running Greek tragedy has merely reached the interval.

"The new government in Athens should expect no more than the briefest of breathing spaces, while the markets' attention returns to Spain.

12.03 Samaras and

Tsipras have arrived at Parliament for talks.

12.01 Here's EC President

Jose Manuel Barroso and EC President

Herman Van Rompuy at the G20 speaking about the

Greek elections:

The

International Chamber of Commerce expects the summit to look at trade and investment, especially resisting protectionism.

11.54 Open Europe has updated EU countries' exposure to

Greece - it's now €552bn, with the

UK holding €13.5bn:

Quote Even with adjustments to the bailout programme, it still looks virtually impossible for the country to meet the various austerity targets. Missed targets will continue to be a source of disagreement and controversy, particularly inside Germany, while the continued EU/ECB/IMF Troika presence on the ground in Greece means that any delays will come to light quickly. Therefore, Greece’s future in the eurozone remains uncertain. For the single currency as a whole, should a compromise be possible in Greece, the focus of attention will shift back to Spain – whose banks remain a major liability for the euro.

11.50 The BBC's Nick Robinson has tweeted that

David Cameron's plane has just landed in Los Cabos, Mexico.

The PM is attending the

G20.

11.43 Andrew Lilico, an economist with Europe Economics, has written a blog for the Telegraph on

what happens next in Greece:

The authorities are running out of hope and bereft of ideas. Every plan involves getting the Germans to pay everyone else's debts. The sheer lack of imagination, the stubborn refusal to engage with or propose any option other than more and more and more bailouts until the thing goes pop, suggests that ultimate disorderly collapse is now more likely than not.

That path would destroy the euro – the French would have to withdraw because they can't afford it and the Germans would withdraw because tomorrow's Germans wouldn't be prepared to do it. There is, however, still a way out. Each country, each bank, each corporation, each household must be responsible for its own debts. If, at the last, we can still remember this fundamental principle, we can still escape.

11.36 BREAKING NEWS...

Fitch revises

India down to negative from stable.

11.34 Spanish Budget Minister

Cristobal Montoro says the

ECB should respond with "firmness" to market pressures (i.e

ECB should prop up Spanish bond market). Adds that markets show doubts remain over Spanish recovery. He says Greece has voted for the euro and that

Spain is at a critical moment.

11.31 Former head of the Cypriot central bank

Athanasios Orphanides says the

Greek election result "not the end of the crisis".

11.28 Vince Cable has said today is "more challenging" that the 1930s Depression, and called for housebuilding stimulus.

On monetary policy:

Quote The right way to understand loose monetary policy is in terms of expectations: of whether future money demand will be growing fast enough to make borrowing to invest or spend worthwhile. It is not enough just to look at the base rate. Quantitative Easing can sound like a powerful instrument – but if it does not succeed in making people expect rising money spending in the economy, it is likely to be far less effective than leaving gold proved in the 1930s...

First, all aspects of monetary and financial policy should be focused on ensuring that the advantages of loose monetary policy are felt everywhere, not just in low government borrowing rates. This encompasses monetary policy, liquidity policy, credit easing and banking policy to ensure that financial institutions perform the role played by building societies and banks in the 1930s but not currently being pursued by damaged and ultra-conservative banks.

Second, the public sector balance sheet has to be used to leverage in private capital, particularly in housing. Demand has to be created, it does not emerge simultaneously. There is scope here to both create demand and solve a pressing supply need at the same time. Innovative approaches to public policy - making the most of the fact that our resolute action has given us a strong balance sheet - are the key to unlock this potential.

11.25 Ambrose Evans-Pritchard on the Greek agony:

Year after year of "internal devaluation" will drive unemployment to catastrophic levels before it breaks the back of the labour movement sufficiently to clear the way for drastic pay cuts. It is basically a Fascist policy. Mussolini pulled it of in 1928 under the Lira Forte policy, but he had coercive advantages.

The electoral settlement is not decisive enough to lance the boil either way so there will no recovery of investment or hope of return no normal life. Even big companies have lost access to routine trade credit. The pro-Memorandum chorus say Greece would face chaos if it left the euro. What do they think it is now?

The agony will drag on until some dramatic event intrudes.

11.20 Spanish

10-year bond yields have hit 7.118pc, big jump today.

It's probably at least partly fuelled by this:

Nicholas Spiro at Spiro Sovereign Strategy:

Quote Spain's debt market is teetering on the edge of collapse, auguring badly for this week's auctions. By admitting that it is no longer capable of propping up its banks, the Rajoy government has sent a message to the markets that the sovereign is in need of external support too. In the realm of investor perceptions, Spain has crossed the Rubicon from solvency to insolvency. The markets are treating Spain's bank-focused bail-out as a pregnancy: there's no such thing as a partial one.

11.15 German Foreign Minister

Guido Westerwelle:

Quote I am very relieved by the results of the Greek elections. It's a vote for Europe. What's imperative is that a government is quickly formed that is capable of acting ... it's about more than fiscal discipline, it's about growth and competitiveness. The result of the Greek elections is that there are no concessions because what has been agreed is now what we will implement. There can be no substantial changes to the agreement.

11.04 Robert Peston at the BBC:

11.01 The

Bundesbank has warned of greater uncertainty over

German growth outlook, "weaker" Q2.

10.56 A photographer tries to get an exclusive photo of

Samaras as he leaves the presidential mansion:

Samaras: "I will try to form a government with pro-European parties.We have to make the necessary amendments to the programme so that our people will get out of unemployment and out of the hardships that Greek households are going through. The new government has to be decisive on the issue of social cohesion. National understanding is imperative."

President Papoulias: "The country cannot stay without a government for even one hour."

10.54 The Telegraph's

Louise Armitstead on the market turmoil this morning:

What’s up with the markets? Angela Merkel got what she wanted from the Greek electorate, didn’t she? A win for New Democracy, the mainstream, conservative and pro-bail-out party. Actually plenty of traders were gunning for a Syriza victory, hoping that Alexis Tsipras would stick to his word and tear up the €130bn bail-out agreement today.

Odd for capitalists, perhaps, but their biggest wish at the moment is for the crisis to be brought to a head, even if that’s armaggedon.

New Democracy is a victory for the on-going fudge: Merkel & Co can pretend that it’s fine to keep supporting Greece, there’s no need to discuss a euro break-up.

But for traders, that’s completely wrong. Athens is going to breach the terms of its bail-out agreement, regardless of who’s in power. At the very least, Greece needs an extension - of perhaps two years - to meet its fiscal targets. And that requires funding. So Germany still has to decide whether to cough up for a third Greek bail-out (the second, worth €130bn, was only signed in March) or break-up the eurozone. Brussels’ refusal to face facts is almost more alarming that the facts themeselves. If she insists on putting her head in the sand over Greece, what does that mean for the far bigger problems of Spain and Italy? If you’re a trader, there’s only one thing to do: run.

10.47 The

German government has said the

Troika will go to

Athens to check on current status. Germany says now is not the time to be giving discounts to

Greece.

10.33 New Democracy leader

Antonis Samaras will meet PASOK leader

Evangelos Venizelos at 4pm. Reuters is reporting that there is the potential for the

Democratic Left to form a coalition with

New Democracy and

PASOK, giving them a 178 majority.

Samaras tells President: "National consensus will bring us all together."

10.30 Nigel Farage, UKIP leader:

Quote Greek election solves nothing, though a referendum on their currency might. Greeks should be given a clear choice to stay in the euro or leave.

10.27 New Democracy leader

Antonis Samaras has arrived to meet Greek President in order to receive exploratory mandate.

10.21 Alex Banbury of Hamilton Capital has put together a list of countries' denials of contagion:

"Spain is not Greece" -

Elena Salgado, Spanish Finance minister, February 2010.

"Portugal is not Greece" -

The Economist, April 2010.

"Greece is not Ireland" -

George Papaconstantinou, Greek Finance minister, November 2010.

"Spain is neither Ireland nor Portugal" -

Elena Salgado, Spanish Finance minister, November 2010.

"Ireland is not in ‘Greek Territory’" - Irish Finance Minister

Brian Lenihan. November 2010.

"Neither Spain nor Portugal is Ireland" -

Angel Gurria, Secretary-general OECD, November 2010.

"Italy is not Spain” -

Ed Parker, Fitch MD, June 12, 2012

"Spain is not Uganda" - Spanish PM

Mariano Rajoy, June 2012

"Uganda does not want to be Spain" -

Ugandan foreign minister, June 13, 2012

10.14 Robert Peston, business editor at the BBC, has suggested that the

Greek exit from the euro might simply be delayed:

Quote What Greece needs is equity, not credit... And there is a fear that debt forgiveness for Greece would be the thin end of a very thick wedge, such that Ireland - for example - might argue that if Greece were getting what would in effect be a large transfer from the rest of the eurozone, it would like a bit of that too, thank you very much.

All of which suggests that the eurozone will continue to expect Greece to honour all its massive debts.

But even before the latest worsening in the eurozone's more general crisis, the IMF was projecting that Greece's economy would shrink by 4.7pc this year and stagnate in 2013. Unless there is some kind of miraculous recovery, the question will continue to loom large for Greek people and leaders whether they should try to escape a crushing debt burden by leaving the eurozone.

10.12 Reuters is reporting that New Democracy leader

Antonis Samaras will meet Syriza leader

Alexis Tsipras at midday (UK time).

10.06 El Confidencial is reporting that

Spanish banks need to increase provisioning for bad residential mortgages to almost €150bn.

10.03 Quick update on the markets:

FTSE 100 -0.1pc

CAC -0.1pc

DAX +0.4pc

IBEX -1.9pc

MIB -1.6pc

ETX Capital's senior trader

Markus Huber said:

Quote In the past, it seems like that as soon as one issue has been resolved or rather, as soon as there is less uncertainty regarding one main issue affecting markets, attention quickly turns to next one, similar to the situation after the Spanish banking rescue last week where focus shifted onto Italy and Italian banks.

"Although the problems Italy is facing in the form of high debt levels and slow growth are well known, for the focus to fully shift on Italy, something else will be needed for example that implementing of urgent financial reforms is being delayed or that the budget deficit due to a bigger contraction in growth has to be revised upwards similar like seen in Spain."

09.59 Panagiotis Pikrammenos, Prime Minister of caretaker government in

Greece,

arrives at Presidential mansion to resign. President tells him that he must remain in his position until a government is formed.

09.52 Spain is saying it is doubtful that

bad bank loans hit record high of 8.72% in April.

09.37 Bank of Ireland says

ECB will apply 5.5pc discount to refinancing of Irish government bonds.

09.30 Alex Spillius, the Telegraph's Greek correspondent, on the elections:

New Democracy leader Antonis Samaras is determined to form a government today, his aides tell the Greek papers. As soon as he receives the mandate from the president he will begin negotiations with Pasok and the Democratic Left. Reports said he wouldn’t insist on being prime minister, but few analysts him expect not to fulfill that role.

Together the three parties would have 179 seats in the 300 seat parliament, a credible number to start a coalition with. The 17 votes of the Democratic Left would be important for anti-bailout credibility, as the party opposed the memorandum of understanding with the EU and IMF.

Here is the final division in the 300-seat chamber: New Democracy 129 (including a bonus 50 for winning), Syriza 71, Pasok 33, Independent Greeks 20, Golden Dawn 18, Democratic Left 17, Communist Party of Greece 12.

09.22 Swedish Prime Minister

Fredrik Reinfeldt (below) says

eurobonds are a "very bad idea" and the EU deposit guarantee scheme is the "wrong way".

09.10 Italian PM

Mario Monti calls PASOK leader

Evangelos Venizelos to discuss Greek election.

Monti arrives at the G20 celebrating the Greek vote. "This allows us to have a more serene vision for the future of the European Union and for the eurozone," he said.

Italian

MIB and Spanish

IBEX now down more than 1pc.

Euro turns negative against

dollar, falls to $1.2628.

09.05 BREAKING NEWS...

Spanish 10-year bond yields hit 7.1pc (euro-era high), spread to

bunds at 555 basis points.

Italian yields pass 6pc.

Spanish banks'

bad loans ratio rises to 8.72pc in April from 8.37pc in March (highest since April 1994).

Lending declines 3.5pc in April from last year,

deposits fall 5.39pc. Mortgage default ratio was 3.01pc in March, up from 2.74pc in December.

08.53 Citigroup says the probability of a

Greek exit from the eurozone over the next 12-18 months remains unchanged at between 50pc and 75pc.

Chris Beauchamp at IG Index:

08.51 Bojan Pancevski, Sunday Times EU correspondent:

In case you missed the

attack, here it is again:

08.44 Spanish 10-year bond yields hit 6.96pc, reversing earlier rally.

Italy at 5.958pc.

08.38 EU will go ahead with

Iran oil embargo in July.

08.23 London Mayor

Boris Johnson has warned European leaders against “dither” in his

Telegraph column today:

Quote By any standards we are seeing a whole nation undergo a protracted economic and political humiliation; and whatever the result of yesterday’s election, we seem determined to make matters worse. There is no plan for Greece to leave the euro, or none that I can discover. No European leader dares suggest that this might be possible, since that would be to profane the religion of Ever Closer Union. Instead we are all meant to be conniving in a plan to create a fiscal union which (if it were to mean anything) would mean undermining the fundamentals of Western democracy...

And now look at what is being proposed in Greece. For the sake of bubble-gumming the euro together, we are willing to slaughter democracy in the very place where it was born. What is the point of a Greek elector voting for an economic programme, if that programme is decided in Brussels or – in reality – in Germany? What is the meaning of Greek freedom, the freedom Byron fought for, if Greece is returned to a kind of Ottoman dependency, but with the Sublime Porte now based in Berlin?

It won’t work. If things go on as they are, we will see more misery, more resentment, and an ever greater chance that the whole damn kebab van will go up in flames. Greece will one day be free again – in the sense that I still think it marginally more likely than not that whoever takes charge in Athens will eventually find a way to restore competitiveness through devaluation and leaving the euro – for this simple reason: that market confidence in Greek membership is like a burst paper bag of rice – hard to restore.

Without a resolution, without clarity, I am afraid the suffering will go on. The best way forward would be an orderly bisection into an old eurozone and a New Eurozone for the periphery. With every month of dither, we delay the prospect of a global recovery; while the approved solution – fiscal and political union – will consign the continent to a democratic dark ages.

08.17 The Telegraph's US Business Editor

Richard Blackden is at the

G20 in Mexico:

The momentus nature of the decisions now facing countries in the euro will dominate this G20 summit. Cameron, Obama and others will urge German Chancellor Angela Merkel and French President Francois Hollande to take decisive action. But behind the exhortations, there will surely be a weary acknowledgement by governments in the UK and the US that this is a crisis that may not be solved in the next two to three years, let alone a matter of months.

And in different ways it is shaping the domestic agendas of both leaders. Alongside the Bank of England, the UK government last week introduced a fresh set of measures to encourage bank lending as fears about the headwinds from Europe intensified.

While for Obama, Europe's debt crisis has a paradoxical effect. On the one hand, it increases the political pressure to address America's own debt. But at the same time, it eases the pressure coming from financial markets to do so because no one wants America sliding back into recession.

08.03 Finland's Parliament will vote on the

ESM on Thursday.

08.00 European markets are open:

FTSE 100 +1.4pc (

banking shares leading the way)

CAC +1.1pc

DAX +1.3pc

IBEX +1.7pc (Spanish

banks rise strongly)

MIB +1pc

Greek stock market is up 3.2pc.

07.59 New Democracy leader

Antonis Samaras is to meet the Greek president at 10.30am (UK time).

07.52 Following his election win last night,

Antonis Samaras says the

Greek people are "staying with the euro" (>video).

Stephen Pope, managing partner at Spotlight Ideas, said:

Quote We will see in the course of the next hours/days if the Pasok leader, Evangelos Venizelos will stick to his demand that the 2nd placed party Syriza join the coalition...but that has to be seen as unlikely. Mr Venizelos is a poltician and he will covet a cabinet post and enjoy the opportunity to court the press.

So what has actually changed? Frankly...nothing. For in power we are likely to see the same group of leaders that signed up to the February deal. If it is too tough now, why did they accept it in February?

07.44 Joerg Kraemer, chief economist at

Commerzbank, says he still sees a

Greek exit from the

euro.

07.42 A look at a possible

Greek parliament:

Interesting to note that more than 37pc of

Greek people did not vote yesterday.

07.34 In the

bond markets this morning,

Spanish and

Italian 10-year yields have fallen seven basis points. Italy now at 5.827pc, Spain still very high at 6.729pc. Greek yields have fallen 138 basis points to 25.38pc.

07.28 France has sent European leaders a proposal for a

€120bn (£97bn) “growth pact”. The Telegraph's

Bruno Waterfield reveals what is wrong with the plan:

07.22 EC spokesman says Commission sees positive market reaction for

Spain and

Italy after Greek election.

07.17 The

Nikkei has closed up 1.8pc as investors cheered a weekend election victory for Greece's two main pro-bailout parties, easing fears

Athens may drop out of the eurozone.

07.12 The

White House has released a statement on the

Greek election:

Quote We congratulate the Greek people on conducting their election in this difficult time. We hope this election will lead quickly to the formation of a new government that can make timely progress on the economic challenges facing the Greek people. As President Obama and other world leaders have said, we believe that it is in all our interests for Greece to remain in the euro area while respecting its commitment to reform. Going forward, we will engage Greece in the spirit of partnership that has guided our alliance and the friendship between our people.

06.57 Mark Lowen, BBC Athens correspondent:

06.50 Want to hear what key financial leaders had to say about today's G20 Summit? Well, we've put together a

round-up of the best quotes.

Robert Zoellick, World Bank president:

Quote Everybody knows that this meeting is coming at an absolutely critical time. We're waiting for Europe to tell us what it is going to do. Markets can manage and hedge risks that they are generally aware of. The danger we're creating is that the pattern of policymaking is increasing uncertainty.

06.38 The

Financial Times has published an interesting opinion piece by

Wolfgang Munchau on the continuing woes of the

eurozone.

Quote In the case of Greece, the best moment to default would not be now, but next year. The country stills runs a primary deficit - before the payment of interest. A default would make more sense for Spain, but not quite yet. It would be easiest for Italy. It has a large pile of debt, but a low deficit. With an interest rate of more than 6pc and a loss of competitiveness, Italy cannot simultaneously remain solvent and inside the eurozone.

06.24 Germany's deputy finance minister

Steffen Kampeter has echoed Chancellor

Angela Merkel by saying that his country expects the new Greek government to honour its commitments to the bailout deal. He says the

Troika must first check the situation in

Greece as further aid hinges on reforms. However, it is clear

Greece must not be pushed too much on these reforms.

06.20 World leaders are in Mexico today and tomorrow for the

G20 Summit. The event is sure to be overshadowed by the

Greek election yesterday and continuing concerns over the financial health of

Spain and

Italy. World leaders are set to boost the $430bn (£273.6bn) fund being used as a

firewall to support struggling eurozone economies.

06.00 ROUND-UP...

New Democracy has won a closely-fought Greek election with anti-bailout pary Syriza. With almost all votes counted,

New Democracy controlled 129 seats in the 300-seat parliament and the socialist

Pasok party - a likely coalition candidate - secured 33 seats, enough for a workable majority.

Syriza came second, electing 71 deputies. Its leader

Alexis Tsipras has ruled out joining a coalition, arguing that the harsh conditions for the bailout deal should be scrapped altogether.

Antonis Samaras (centre), arrived to vote at a polling station in his hometown of Pylos

Talks on forming a government are expected to start today, with head of state

Carolos Papoulias set to task

New Democracy leader

Antonis Samaras with piecing together a coalition.

However, some investors are far from confident that the crisis is over.

Neil MacKinnon, global macro strategist at the investment bank VTB Capital, said: "I think investors should treat any sort of knee-jerk rally with caution."

"How long is it going to take for people to worry about Spain again?" wondered

Peter Schiff of the brokerage Euro Pacific Capital.

"This crisis is not over," said

John Silvia, chief economist at Wells Fargo. "The crisis will wax and wane for years. Maybe it will wane for the time being."

05.52 European markets are expected to open strongly at 8am today. The

FTSE 100 is predicted to open up 1.2pc, the

CAC 1.7pc and the

DAX 2.2pc.

05.46 China,

Japan and

Australia have all called for

Greece to quickly form a government.

"The Greek parties must work together to form a new government quickly and convince the Greek voters of the need for painful austerity," China's official

Xinhua news agency said in a commentary. "They must understand a Greek exit from the eurozone is out of the question," it added, adding that ditching the euro would open a "Pandora's box", leading to "years of painful economic and social adjustments".

Japanese Chief Cabinet Secretary

Osamu Fujimura said: "Our country hopes that a stable government will be launched early and make progress towards stabilising markets... We hope that European countries will urgently take measures to strengthen its financial sector."

Australian Treasurer

Wayne Swan said: "It is important that Greece's political parties quickly undertake coalition discussions and form a stable government... I accept that there will be continuing volatility from Europe for some time yet, but I do not accept that the pace and scale of action to address it has been adequate."

05.42

Asian markets have surged this morning and the

euro has risen after

Greek pro-austerity parties won enough votes to form a government, but optimism it will stay in the eurozone was tempered with warnings that the future remains uncertain.

Tokyo stocks jumped 1.89pc,

Hong Kong surged 1.55pc by the break

, Sydney was 1.90pc higher,

Seoul climbed 2.01pc and

Shanghai added 0.69pc.

The election news boosted the

euro, which surged to morning highs of $1.2727 before easing slightly to $1.2701.

04.45 For those who are waking up to news of anti-austerity party Syriza's defeat in the Greek elections, here is an overview of the result which has caused a gains in the Asian markets this morning.

04.18 The New York Times has written an interesting piece, looking at

Greece as a victim of the euro rather than the villain.

Paul Krugman writes in an op-ed:

OpinionEver since Greece hit the skids, we’ve heard a lot about what’s wrong with everything Greek. Some of the accusations are true, some are false — but all of them are beside the point. Yes, there are big failings in Greece’s economy, its politics and no doubt its society. But those failings aren’t what caused the crisis that is tearing Greece apart, and threatens to spread across Europe.

No, the origins of this disaster lie farther north, in Brussels, Frankfurt and Berlin, where officials created a deeply — perhaps fatally — flawed monetary system, then compounded the problems of that system by substituting moralizing for analysis. And the solution to the crisis, if there is one, will have to come from the same places.

03.25 Oil prices have advanced in Asian trade, mirroring the gains in broader asset markets.

New York's main contract, light sweet crude for July delivery advanced 90 cents to $84.93 a barrel and Brent North Sea crude for August delivery surged $1.48 to $99.09 in morning trade.

02.45 EU leaders heading to Monday's G20 summit in Mexico have agreed on a message to reassure financial markets. After talks with his British, French, German, Italian counterparts and top European Union officials, Spanish Prime Minister Mariano Rajoy told reporters in Los Cabos:

Quote I think that what we are going to transmit is a message of confidence in the euro. Spanish Prime Minister Mariano Rajoy told reporters in Los Cabos, after talks with his British, French, German, Italian counterparts and top European Union officials.

02.30 Hong Kong stocks have risen, with the benchmark index headed for its biggest two-day gain in six months.

The Hang Seng Index climbed 1.6 percent to 19,548.40 as of the 9:39 am in Hong Kong. The gauge was headed for a two-day gain of 5.8 percent, the biggest since Dec 2. All but one of the 49 companies on the gauge advanced, with volume 56 percent above the 30-day average. The Hang Seng China Enterprises Index of mainland stocks rose 1.8 percent to 9,921.37.

01.34 Market watch -Tokyo stocks have jumped more than two percent. The Nikkei 225 index was trading 2.23 percent higher - 190.77 points - at 8,760.09 in the first minutes of trading.

The results in Greece also sent the euro higher in early Asian trade. The single currency was buying $1.2715 and 100.75 yen, up from $1.2644 and 99.47 yen in New York trade on Friday.

00.30 Market watch -The Australian and New Zealand dollars have risen following the result in Greece. Both currencies strengthened - the Australia dollar climbed 0.6 per cent to a one-month high of $1.0115 and the New Zealand dollar hit its strongest point in six weeks, up 0.5 per cent to $0.7918 having earlier peaked at $0.7937.

Mike Jones, a Wellington-based currency strategist at Bank of New Zealand Ltd, said:

QuoteThe easing of fears for a Greek euro exit have spurred a relief rally across global markets. Markets seem to have got the result they wanted from the elections over the weekend. In the short term, risk currencies such as the kiwi and Aussie are biased to strengthen.

23.12 German Chancellor

Angela Merkel has telephoned

Antonis Samaras to congratulate him on his victory, saying that she was confident Athens would abide by its bailout pledges.

"She stated that she would work on the basis that Greece will meet its European commitments," said a government statement recounting the conversation.

23.05 An update from

Alex Spillius in Greece, who says negotiations are already underway in Athens:

QuoteGreek TV reports that Greek PM-in-waiting

Antonis Samaras has already begun late night coalition talks with potential partners, while

Francois Hollande has called Pasok leader and fellow socialist

Evangelos Venizelos to discuss the results, suggesting the Frenchman wants to know what concessions the new likely Greek coalition will seek from Europe.

22.51 And another update on the Greek count, which has processed 91.41pc of votes:

New Democracy is at 29.83pc,

Syriza 26.78pc and

Pasok 12.4pc.

22.51 The

Eurogroup has issued a statement on the Greek elections, which it says "should allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth".

QuoteThe Eurogroup acknowledges the considerable efforts already made by the Greek citizens and is convinced that continued fiscal and structural reforms are Greece’s best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area.

The Eurogroup reiterates its commitment to assist Greece in its adjustment effort in order to address the many challenges the economy is facing.

The Eurogroup therefore looks forward to the swift formation of a new Greek government that will take ownership of the adjustment programme to which Greece and the Eurogroup earlier this year committed themselves.

The Eurogroup expects the Troika institutions to return to Athens as soon as a new government is in place to exchange views with the new government on the way forward and prepare the first review under the second adjustment programme.

22.40 We have another update on the Greek election count, although the exact figures will alter nothing about the political stalemate that needs to be untangled in the morning. After taking into account 88pc of the votes,

New Democracy has 29.93pc,

Syriza 26.7pc and

Pasok 12.43pc.

22.25 Former Chancellor

Lord Lamont has spoken to Sky News, claiming that markets will likely be relieved initially that what some saw as the worst scenario - a Syriza win - has been avoided. But "very few people believe that greece is in a tenable position for the long term", he warned:

QuoteI don't think there will be very much movement on the part of the eurozone, after all this is the second bailout. People are not going to start proposing revising the terms in any substantive way. I don't expect the eurozone to change its position significantly.

I think tonight's election result means that there won't be immediate contagion from Greece. I don't want to sound too gloomy, but one has to be realistic about this, there is a very serious situation in Spain already.

22.21 Tomorrow's front pages are starting to emerge. The FT has gone with the headline: "Samaras leads in Greece poll", which will likely change for the final edition, while The Daily Telegraph has opted for: "Greek vote leaves euro in balance".

22.11 We have a graphic, due to appear in tomorrow morning's paper, showing the difference in results six weeks ago and today. Syriza has seen its vote rise from 16.8pc to 27.1pc - so it's understandable that they see it as a victory of sorts.

22.09 Herman Van Rompuy and

José Manuel Barroso have issued a

joint statement on the Greek election:

The Greek people have spoken. We fully respect its democratic choice. We are hopeful that the election results will allow a government to be formed quickly. Today, we salute the courage and resilience of the Greek citizens, fully aware of the sacrifices which are demanded from them to redress the Greek economy and build new, sustainable growth for the country.

We will continue to stand by Greece as a member of the EU family and of the Euro area. We look forward to work with the new government and to support the continued efforts of Greece to put its economy on a sustainable path.

The second economic adjustment programme agreed between Greece and the Eurogroup is the basis upon which to build to foster growth, prosperity and jobs for the Greek people. We stand ready to continue assisting Greece in achieving these goals.

21.52 The

White House has congratulated Greece on its election and urged it to quickly form a government. Spokesman

Jay Carney said:

QuoteAs President (Barack) Obama and other world leaders have said, we believe that it is in all our interests for Greece to remain in the euro area while respecting its commitment to reform. We congratulate the Greek people on conducting their election in this difficult time. We hope this election will lead quickly to the formation of a new government that can make timely progress on the economic challenges facing the Greek people.

Back in Europe, German Finance Minister

Wolfgang Schaeuble said that the outcome shows that Greeks are in favour of the deep economic and fiscal reforms.

21.50 Alexis Tsipras has given another speech this evening, very optimistic in tone, almost sounding like a victory rally at times.

Quote Democracy will return to the country where it was born.

21.43 French prime minister

Jean-Marc Ayrault has welcomed the victory of his Socialist Party in legislative elections, saying: "The goal is to shift Europe towards growth and protect the euro zone from speculation. The task before us is immense".

21.13 Reacting to the French and Greek electoral results,

Pierre Moscovici, the French finance minister said: "Europe's future is at stake in the coming weeks."

QuoteEuropeans must accompany the Greeks towards growth. It requires discipline but it also requires hope.

Mr Moscovici also said that France's state finance commitments would be "respected without a politics of austerity".

21.05 Simon Smith, chief economist at FxPro, comments on tonight's result:

QuoteThe fact that New Democracy came ahead of Syriza, who were looking to drastically re-negotiate the current bailout with the troika, means that markets are likely to breathe a collective sigh of relief, although it could well be brief. Given what is at stake, all parties are likely to negotiate in great detail in order to secure their mandate for a coalition.

21.01 Daniel Hannan, Conservative MEP for South East England and a Telegraph blogger, asks

how much longer the inaction in Greece can go on for.

No one wanted this outcome. Greece has repeated itself, only more emphatically, declining to give any party a majority. If no coalition is possible, what then? A third election? A fourth? Or will ND struggle on with a minority administration, unable to make any of the promised budgetary reductions?

Greece is in denial. It rejects austerity, but insists on keeping the euro. All the main parties duly parroted what the voters wanted to hear, making for a fantasy election, a make-believe election, a fingers-in-my-ears-I-can't-hear-you election. The only list which was honest about the necessary cuts – a coalition of three liberal parties – failed to gain a single seat.

20.45 The head of the World Bank,

Robert Zoellick, says the Spanish bailout was a wasted opportunity, which is worrying, because nobody in Europe can afford to waste €100bn at the moment:

QuoteLook, everyone knows this meeting is coming at an absolutely critical time - and we're waiting for Europe to tell us what it is going to do.

Markets can manage risks that they're well aware of. The danger we're creating is that the pattern of policy-making is increasing uncertainty and making markets more nervous, which has a negative feedback.

To take your Spanish example... The execution was extremely poor. So they took a very big bullet and they wasted it.

20.34 And now

Alexis Tsipras, leader of Syriza, is making his concession speech:

QuoteWe are proud that we lifted this weight and we carried this responsibility. We are happy for the tolerance and the support of such a large portion of the country that multiplied our participation in just a month and a half.

I did call Mr Samaras a little while ago and I congratulated him for his success. He has the possibility of forming a government on the basis of his mandate.

We will be present in the developments from the position of the opposition. We will not sacrifice our position. The rejection of the bailout is a popular mandate. From Monday we will continue in our struggle.

20.25 An update now on the official count in Greece, based on 49.3pc of votes:

New Democracy has 30.3pc,

Syriza has 26.3pc and

Pasok trails with 12.7pc.

20.20

Antonis Samaras, leader of New Democracy, has offered a coalition deal to any parties that will continue to abide by the bailout agreement. His party didn't offer "populist promises", and still won the backing of the Greek people, he says:

QuoteThe Greek people have voted today for the European direction of the country and for us to remain in the euro, and it voted for those policies which will bring jobs... we will not have new adventures. We will not doubt the position of Greece in Europe. We will not be reigned by fear, and espcially the sacrifices the Greek people have made will be realised significantly.

We do invite all of those political parties that do take into account all of these objectives to participate in a coalition of national unity. We do not have any time to waste.. the country must be governed. New Democracy was is, is and will continue to be a strength of responsibility.

20.17 Samaras is about to give a speech in Athens. But the microphone is broken so we're waiting...

20.11

Alexis Tsipras, leader of Syriza, has telephoned

Antonis Samaras, leader of New Democracy leader, to congratulate him on his victory. Unofficial and official polls suggest that New Democracy will take the lead, and Tsipras has

conceded.

20.04

Syriza has said tonight's result is a victory of sorts as it will allow the party to play the role of a strong opposition. But it has also ruled out the prospect of joining a coalition (it was itself a coalition until a few weeks ago, when it registered as a single party to be eligible for the 50-seat bonus should it win the election).

Pasok has already said that it won't join a coalition unless

Syriza is involved. So a lengthy period of talks and negotiation looks set to start. New Democracy, if they win, as looks likely, will have three days to attempt to form a government.

19.33 Official exit numbers are in, and New Democracy are on course to win. The numbers: ND 29.5pc, Syriza 27.1pc, Pasok 12.3pc, Independent Greeks 7.6pc, Golden Dawn 7pc, Democratic Left 6.2pc, Communist Party of Greece 4.5pc. These are numbers from Singular Logic, commissioned for the job by the Greek government.

19.30 Reports suggest that Pasok will be unwilling to join a coalition that doesn't involve Syriza.

19.17 German Foreign Minister

Guido Westerwelle says Germany could be flexible on the timing of the reforms that Greece has to make as part of its bailout package - but not the meat of the deal:

QuoteThere can't be substantial changes in the engagements. But I can imagine we discuss again a delay.

19.05 It's become a sideshow to the Greek election, but

France's Socialists have won control of parliament. That gives

Francois Hollande a convincing majority with which he can push through his tax-and-spend agenda.

The Socialists' bloc obtained between 312 and 326 seats - an absolute majority in the 577-seat National Assembly.

19.02 AFP reports that Germany is ready to discuss giving Greece more time to carry out reform.

19.01 This tweet sums up the Greek election polls pretty well. The only certainty is that it will be close.

18.54 Some official figures are starting to emerge from the Greek Interior Ministry. With 15pc of the votes counted,

New Democracy has 31.1pc, while

Syriza has 25.4pc. But it should be noted that these are rural votes, and the electorate in Athens will bring the average back towards the left. Meanwhile, an unofficial poll suggests that a New Democracy/Pasok

coalition would have a majority of 159 seats.

18.44 Alex Spillius in Athens reports:

QuoteGreek state TV estimates that on those exit numbers New Democracy and Pasok could form a coalition. The 300 seats would be distributed thus:

New Democracy 127 (including the bonus 50 for winning), Syriza 72, Pasok 32, Independent Greeks 21, Golden Dawn 19, Democratic Left 16, Communist Party of Greece 13.

18.37 Despite that last update, the full, unofficial exit polls are in, and we could be heading for a very narrow New Democracy win in Greece.

New Democracy has between 28.6pc and 30pc, and radical left group

Syriza has between 27.5pc and 28.4pc. We've got an updated chart below.

The official exit poll comes at 9.30pm local time, 7.30pm in London, but it could be the early hours before we have a final result.

18.36 Skai TV in Greece is predicting that

Syriza will edge just ahead to take 28pc of votes, while

New Democracy will trail slightly with 27.5pc. But the winning party gets 50 bonus seats, so Syriza would end up with 124 and New Democracy just 73.

18.29 Meanwhile, in France, AFP reports the Socialists have won an absolute parliamentary majority. More on that soon.

18.24 Ed Conway reports that there's no G20 response on the way following the Greek election. The question now is how markets will react to yet more uncertainty while politicians scrabble to form a coalition.

18.14 Greek economist

Yanis Varufakis is speaking on Sky News now, and

says that the neo-Nazi

Golden Dawn party winning seats today is the "serpents egg hatching again in Europe as the result of a depression".

QuoteWithin a year we don't know if the eurozone will still exist. Look at Spain.

Golden Dawn leader Nikolaos Michaloliakos

18.00 A quick chart showing the first exit poll, which includes 80pc of voters. The blue bar represents the lower end of the estimate and the red the upper. We'll have the full unofficial exit poll data in around 15 minutes, then the official poll at 7.30pm.

17.52 The exit poll we already have from Greece is based on just 80pc of voters. Very soon we'll have data from the remaining fifth, which will help clear up the final result.

17.43 This is the crowd at the

Syriza campaign kiosk in Athens as the first exit poll results were announced on TV. The mood looks good, as well it should: they won just 17pc of the vote six weeks ago, and now look likely to almost double that.

17.38 The BBC's

Tim Weber suggests Greece needs a change of electorate, not elected.

17.34 Channel 4's

Faisal Islam tweets that the late rush of voters could have worked in Syriza's favour:

17.19 As we mentioned earlier, the party that gains the most votes in Greece will win an extra 50 seats. So while the election looks far too close to call at the moment, the party which eventually ends up ahead will be bumped even further forward automatically. Despite this, there could still be trouble forming a majority, leading to yet more uncertainty over the country's future. We'll bring you more news as it comes in.

17.08 We have more detail on the first exit poll from

Alex Spillius in Greece:

QuoteFirst exit polls from Greek state TV show it is neck and neck. With 75pc of polling stations accounted for, New Democracy is forecast to win between 27.5pc and 30.5pc, and Syriza 27pc to 30pc. In other words, this a cliffhanger that could drag into the wee hours.

Pasok is third with between 10pc and 12pc, the neo-fascist Golden Dawn will definitely sit in parliament for the first time with 6pc-7.5pc. Democratic Left of Fotis Kouvelis is on 5.5pc-6.5pc and the Communist Party vote has sunk even further to 5pc-6pc.

17.02 The first exit poll is out, and it's far too close to call, with

New Democracy ahead of anti-austerity

Syriza by just half a percent:

New Democracy 27.5pc to 30.5pc

Syriza 27pc to 30pc

17.01 And that's it: polls are closed in Greece.

16.59 Over in the French elections, voter turnout at 5pm local time (3pm GMT) fell to 46.16pc, from 49.58pc at the previous election in 2007, according to Interior Ministry data. The turnout dropped more than two percentage points from last week’s first-round level. The last polling station closes at 8pm local time tonight in France’s largest cities including Paris and Lyon.

16.57 One man and his dog cast their vote earlier today in Greece. We're now in the final few minutes of voting and await the first exit poll.

16.45 Greek state-run NET TV is reporting an abstention rate higher than in the May 6 poll. Remember that voting is officially mandatory in Greece, although no longer enforced. The first exit polls will be out in 15 minutes - giving us a hint of what to expect from the final count.

16.38

Mehran Khalili, a photojournalist from Greece, writes on his Twitter profile: "I live in a beautiful country that's having a tough time." He's currently in a polling station in Corinth and says that voter numbers have picked up in the last hour before closing. There are just 22 minutes left to vote for the people of Greece...

16.31 Channel 4's

Jon Snow is in Athens covering the election and was strolling through the city last night, when the national team was expected to have been beaten by Russia in the Euro 2012 football tournament.

He writes:

QuoteInstead their team beat Putin’s boys. Uncertainty turned very fast to celebration and then soured to name calling as it dawned upon them that the Euro Championships in Ukraine could contort in such a way that Greece would play who but even mightier Germany. Germany, God of the other Euro - the cash, the curse, the undoing of Greece’s traditional modes of wayward governance and corruption. The chanting was amongst the most obscene I’ve ever heard. In short, Angela Merkel was being invited to put the entire Euro crisis up her posterior.

16.21 Europe's leaders are doing too little, too late, says World Bank chief

Robert Zoellick. Speaking in the latest issue of Der Spiegel he said:

QuoteEuropean politicians always act a day late and promise one euro too little. Then, when it gets tight, they add new liquidity. It's no longer so much about which model the Europeans choose. They should just decide on one. Quickly.

World Bank chief Robert Zoellick

16.14 We're expecting exit polls from Greece very soon, but indidications so far point towards a photo finish - we may not have a clear resolution. And if there's one thing that markets don't like, it's uncertainty.

15.46 Just 74 minutes until

Greek polls close, and I'm handing over the live blog to

Matthew Sparkes.

15.45 Tourism is a huge money generator in

Greece, but this could come under huge pressure if the country left the euro, according to

Andrew Dunn, founder of luxury travel company

Scott Dunn:

QuoteGreece’s exit from the euro would usher in a difficult time for the country’s tourism industry. With the return of the

Drachma would come the likelihood of hyperinflation and loss of guest confidence in the destination. Uncertainty about the

Greek economy had already impacted our guests’ bookings for the country, and I fear things would get worse before they improved. A family holiday is sacrosanct to most people, so travellers would not want to gamble with their precious time in the sun.

Greece’s loss would be the gain of destinations such as

Italy and

Portugal, which are already firm favourites with our guests.

"

Greek hoteliers would be caught between a rock and a hard place: they would face currency devaluation and probable inflation at home, but have to continue dealing in

euros with international tour operators and travel firms, who would prefer the safety of Europe’s main currency. Currency losses could compound an already parlous position for many

Greek holiday businesses.

15.40 Bradley Davis, from the Wall Street Journal, is in Greece:

15.35 National parliaments should provide democratic oversight if Europe adopts more integrated economic governance,

France's prime minister has said, warning that the

European Central Bank should not dictate countries' policies.

"If we are going to work more closely together on what is called economic governance, there also has to be democratic control, which in my view cannot be confined to the European Parliament alone,"

Jean-Marc Ayrault said.

"There has to be a role for national parliaments:

Europe remains and will remain a federation of nation states."

15.30 Bruno Waterfield in Brussels:

After euro bonds there's now talk of eurobills, with shorter maturities and issued in smaller amounts.

According to Der Spiegel, the "eurobonds-lite" plan means crisis hit countries would be allowed new financing via a scheme of eurobills, with issuance limited to a fixed percentage of economic output.

Those who do not comply with stringent rules and conditions for issuing the bills, likely to be linked to EU intrusion on tax revenue policy, will be banned from trading in them the following year.

The proposals to be discussed at a Brussels summit on June 28 are seen as being in line with the EU treaty, and the German constitution, because they will be so limited in amount and duration for exceptional circumstances.

15.25 Henry Samuel, the Telegraph's French correspondent: "Voter turnout for French parliament election 21.41pc at midday, slightly down on 2007 but not bad given it's the fourth election in two months."

15.19 Eurogroup head

Jean-Claude Juncker has reportedly told Austrian newspaper Kurier that there is no room for renegotiating the substance of the

Greek bailout package.

15.04 Two hours until polling stations close in

Greece.

15.02 The

EU-Mexico summit is ready to begin. It is taking place on the margins of the

G20 Summit , which starts tomorrow:

And

Van Rompuy has tweeted this picture of him and EC President

Jose Manuel Barroso.

14.54 Robert Nisbet from Sky has quoted the head of the

Bar Association in Athens as saying the constitutionality of this election could be challenged as share of

MPs is based on 2001 census. The 2011 census was carried out but the results are still being "analysed" and applied by government ministry.

14.43 More from Labour MP

Peter Hain:

14.38 Remember that woman who interrupted a live

Sky News report earlier? (see 12.01) Here's the video:

14.33 In

Greece, the threshold a party has to cross to enter

parliament is 3pc of the popular vote. The electoral system is a so-called “reinforced proportional representation” system.

The “reinforced” bit means that the party with the most

votes automatically gets a bonus of 50 seats.

In practical terms, the party with the most

votes needs to get between 36.4pc and 42.69pc of the popular vote to control an absolute majority in

parliament on its own, something that is looking unlikely today.

14.06 Nathalie, a freelance journalist in Greece, has tweeted:

Interestingly, voting in

Greece is mandatory, according to the constitution, although sanctions are no longer imposed on those who abstain.

14.04

Syriza has asked the

Interior Ministry to keep the polls open for an additional two hours on the islands of

Lesvos and

Hios, as high winds and a ferry crash on Saturday have meant that many constituents met with delays in trying to reach the islands.

13.51 Quick word on Germany, where activists calling for a tax on financial transactions have erected a wall of sandbags outside the

Frankfurt Stock Exchange.

The anti-globalization group

Attac said that about 200 people participated in Sunday's action, with the wall meant to symbolize a rampart against financial speculation.

Carrying placards with slogans such as "Stem Speculation" and "Financial transaction tax now", they built the wall of sandbags around the

statues of a bull and a bear - symbols of optimistic and pessimistic markets - that stand in front of the exchange building.

13.44 Google's Greek homepage features an election doodle today:

13.40 Morgan Stanley has said a joint central bank statement declaring a readiness to act on the

eurozone crisis could come before markets open tomorrow.

13.35 The Telegraph's

Alex Spillius is at a polling station in northern Athens.

Turnout looks as high as last time.

Both New Democracy and Syriza volunteers are confident about increasing their share of the vote as pro and anti-bailout sentiment consolidates around each party. Even Syriza supporters think ND will win.

People wait to cast their vote at a polling station in Athens

Yiorgos Vrassidis, 55, said he wasn’t a big fan of Syriza but voted for them as “an expression of anger”. “I hope they can lighten the pressure of the memorandum a little but it feels there is no light at the end of the tunnel for not only Greeks but all of southern Europe.”

There are a lot of different opinions among Athens voters today, as you would expect with 21 parties running. But one common thread is that no one expects the coalition government that will be formed in the next couple of days to last long. I just met a man named Theodore Bouzas whom I interviewed at the same polling station last month. "I hope I don't see you again soon," he said, without much confidence.

13.34 We are hearing reports that a second hand grenade HAS been found at

Skai TV. Specailist military unit on the way to the scene.

13.31 David Song, currency analyst at DailyFX, on rates:

Quote Beyond the Greek elections, the conference [G20 meet on Monday and Tuesday] in Mexico may prop up the single currency as the G20 plans to tackle the heightening risk for contagion, but the meeting may do little to restore investor confidence should the group struggle to meet on common ground. Meanwhile, European Central Bank board member Ewald Nowotny continued to voice his support for a zero-interest rate policy in order to combat the downside risks for the region, but went onto say that it is too early to speculate on a third Long-Term Refinancing Operation, according to an interview with a German newspaper.

Indeed, it seems as though the Governing Council is leaning towards a rate cut amid the heightening risk for a prolonged recession, but the ECB may have little choice but to implement a range of tools to shore up the ailing economy amid the ongoing turmoil in the financial system.

13.26 Here's that Radio Four interview with

Tony Blair on the eurozone (see 12.45pm):

listen to ‘Tony Blair on eurozone crisis, Greek elections and more - The World This Weekend, BBC Radio 4’ on Audioboo

Source : http://www.telegraph.co.uk/finance/debt-crisis-live/9336591/Greek-election-debt-crisis-and-G20-Summit-as-it-happened-June-17-18-2012.html

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