Greece Gets Hint of Leeway From Euro Officials

European governments hinted at giving Greece extra time to meet budget-cut targets, as long as the financially stricken country’s feuding politicians put together a ruling coalition committed to austerity. Calling talk of a Greek pullout from the euro “nonsense” and “propaganda,” Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid. “The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday. “If there are dramatic changes in circumstances, we wouldn’t close ourselves off to a debate over extending the deadlines.” Greece’s post-election impasse multiplied the signs of stress in European markets yesterday. The euro fell for the 10th time in 11 days and stocks surrendered a two-day gain. Bond yields in recession-wracked Spain, the next potential candidate for financial support, touched a five-month high. “The euro breakup story is gathering steam again,” Marchel Alexandrovich, a senior European economist at Jefferies International in London, said in a research note. “If Greece were to ever exit the euro, no amount of reassuring comments will convince investors that other countries won’t soon follow.” ‘Two-Way Street’ Greek President Karolos Papoulias will call party leaders together today, the ninth day of post-election maneuvering, to make the case for a government of prominent non-politicians. The head of the biggest anti-bailout party, Alexis Tsipras, will attend after boycotting yesterday’s bargaining sessions, state- run NET TV reported. “Solidarity is a two-way street,” European Union Economic and Monetary Commissioner Olli Rehn said. “ We expect that the commitments are respected and the fiscal targets are a core part of the commitments.” Greece’s caretaker government will also announce whether it will repay 436 million euros due today on a note held by investors who shunned its bond-loss accord. Paying the holdouts in full would anger investors who took losses in this year’s debt restructuring, while withholding payment could be construed as default.