Greek Deadlock: New Elections Planned

Greece is to hold a new election in June after days of talks between politicians failed to resolve the country's political deadlock.

The Athens Stock Exchange initially plunged 4.86% on the news before recovering slightly.

The decision comes nine days after the initial election left an inconclusive vote, prolonging a political crisis that pushes it closer to bankruptcy and departure from the euro.

After a third day of failed talks with political leaders, a spokesman for President Karolos Papoulias said the process of seeking a compromise had been declared a failure and a new vote must be held.

He did not immediately give the date for the new vote, but elections rules suggest it will be in mid June. A caretaker government would be formed on Wednesday, the spokesman said.

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"For God's sake, let's move towards something better and not something worse," Socialist party leader Evangelos Venizelos told reporters after the meeting. "Our motherland can find its way, we will fight for it to find its way."

Greece remains without a government since its inconclusive election left parliament split between supporters and opponents of a ???130bn (£103.7bn) bailout package reviled by Greeks for imposing deep wage, pension and spending cuts.

Polls show the leftist Syriza party, which rejects the bailout and came second in last week's vote, is now on course to win, a result that would give it an automatic bonus of 50 seats in the 300-seat parliament.

European leaders say that they will cut off funding for Greece if it rejects the bailout agreed in March, which would mean bankruptcy and all but certain exit from the European single currency.