Party leaders gather to appoint caretaker PM as pressure on Greece grows

Greek party leaders met with President Karolos Papoulias on Wednesday to appoint a caretaker prime minister and government that would lead Greece to new elections that many hope will end the political instability threatening the country?s future.

The leaders of all the parties elected to Parliament on May 6, apart from Chrysi Avgi (Golden Dawn) chief Nikos Michaloliakos, convened for the meeting with Papoulias.

If the party leaders fail to agree on a common candidate to take over as caretaker prime minister, President Karolos Papoulias will appoint one.

The constitution decrees this should be the head of one of Greece?s three highest courts. The favorite to be given the job is Council of State president Panayiotis Pikramenos. He will then agree on a new cabinet with the help of Papoulias.

The MPs elected on May 6 will be sworn in tomorrow but Parliament will be dissolved on Monday or Tuesday so elections can be held, most probably on June 17.

There is concern about Greece?s banking system after President Karolos Papoulias informed party leaders on Monday that about 700 million euros had been withdrawn by savers on that day.

According to the minutes of the meeting, Papoulias said that Bank of Greece Governor Giorgos Provopoulos said there was no panic or danger of a bank run at the moment but he expressed concern that ?fear could turn into panic?.

An average of almost 3 billion euros has been withdrawn from Greek banks each month since the crisis began but the Financial Times quoted unnamed banking sources as saying that about 5 billion euros has been withdrawn this month alone.

France?s new Socialist President Francois Hollande sought to assuage fears about Greece?s future when he met with German Chancellor Angela Merkel in Berlin on Tuesday.

"I hope that we can say to the Greeks that Europe is ready to add measures to help growth and support economic activity so that there is a return to growth in Greece,» he said.

However, German Finance Minister Wolfgang Schaeuble moved quickly on Wednesday to douse any hopes Greek politicians might have of changing the terms of the EU-IMF loan deal.

"This is an aid programme that was prepared down to the last detail, we cannot re-negotiate it,? Schaeuble told Deutschlandfunk radio

Greece?s crisis is also having an impact on stock markets, European shares fell on Wednesday morning in a broad-based sell-off due to concerns about the country?s instability.

The FTSEurofirst 300 index fell 0.6 percent to 991.50 by 0828 GMT, having dropped 0.7 percent on Tuesday after Greek politicians failed to put together a ruling coalition, paving the way for a new election and ramping up concern over what would happen if it leaves the euro zone.

"Even if they form a government it remains to be seen if they will find some sort of compromise with Europe, because if you look at the European rhetoric, it doesn't seem too happy to give too many concessions to Greece at this point,» Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, told Reuters.