Parties fail to reach agreement as new elections loom in Greece

Greek conservatives have failed to form a government, paving the way for anti-austerity leftists to try and cobble together a coalition despite Germany and EU warnings the country must stick to its bailout deal.

The development on Monday underscored the precarious situation of the country in its fifth year of recession, which needs bailout funds to stay afloat but where painful austerity measures have given rise to widespread voter anger.

Conservative New Democracy leader Antonis Samaras said his efforts to form a "national salvation" administration had failed, meaning the runner-up, radical leftist party Syriza, would now be tasked with forming a government.

"I did whatever I could to secure a result but it was impossible," Samaras said in a televised address after a day of separate meetings with fellow leaders.

"I informed [head of state President Carolos Papoulias] and returned the mandate," the 60-year-old leader said.

Samaras was rebuffed by Syriza and the small Democratic Left group, while the nationalist Independent Greeks and the Communist party refused to even meet with him.

Third-place socialist PASOK, formerly in a coalition with New Democracy, agreed to cooperate but only if the leftists also joined.

The parties' snub of Samaras indicates they are paying more attention to the punishing message sent Sunday by voters fed up with austerity measures than to worries about the future of the euro or stern warnings from Berlin and Brussels.

Another election, possibly as soon as next month, looms for the country that is reliant on international support to avoid bankruptcy.

Sunday's vote saw parties backing the stiff international rescue package lose their majority in parliament, raising the chances of a  possible Greek exit from the common euro currency.

The uncertainty weighed on markets across Europe, with the Athens exchange closing 6.7% down.

Official results showed conservative New Democracy came first with 18.8% and 108 of Parliament's 300 seats. 

And if the deadlock does not ease, Greece faces new elections under a caretaker government in mid-June, about the time it has to detail new drastic austerity measures worth $19bn for 2013 to 2014.

German Chancellor Angela Merkel on Monday said it was "of utmost importance" that Greece stick to the reform course agreed in exchange for an EU bailout, despite the voter backlash.

Greek voters on Sunday delivered a resounding anti-austerity election verdict, punishing the ruling coalition and leaving the country's political future and the eurozone's stability hanging in the balance.

Greece's two-party coalition, which imposed a harsh austerity programme in return for an international bailout, was routed according to near-complete official figures released early on Monday.

PASOK party and the Conservatives of New Democracy (ND) scored just 32.4% between them, plummeting from 77.4% in the 2009 vote, according to interior ministry figures based on 95% of the vote counted.

While the ND scraped into first place in the election, it was with the party's lowest score so far.

In second place came the leftist, anti-austerity Syriza party, with 16.6% of the vote and 51 seats, more than tripling its 2009 showing.

The once-mighty PASOK was reduced to third place, its vote more than halved to 13.3%, or 41 seats, the voters' deserting it for having pushed through punishing public spending cuts.

The election also fragmented the political landscape, with voters sending at least seven parties to parliament, two more than previously.

One of the newcomers is the neo-Nazi Hryssi Avgi (Golden Dawn), breaking into parliament for the first time in nearly 40 years. Its 6.9% of the vote should give it 21 deputies, according to the latest ministry figures.