Borrowing costs for debt-laden Greece have surged massively as the smallest party in the ruling coalition decided to exit the government. The move raised uncertainty over reforms and the country's ability to repay debt.
Yields on Greek 10-year government bonds soared to above 11 percent in midday trading Friday - their highest level so far this year. Interest to be paid on the benchmark government debt rose by almost 1 percent from Thursday, in a sign that investor confidence in the debt-laden eurozone country is eroding.
In addition, shares traded at the Athens Stock Exchange were down by over 3 percent.
The collapse of the government sparked renewed fears over the country's reform process and its ability to repay massive debt. For the past three years, Greece has been dependant on rescue funding to the tune of 240 billion euros ($316 billion), provided by the EU, the International Monetary Fund (IMF) and the European Central Bank.
As a result of the government crisis, debt inspectors have suspended a review of the country's public finances, and the IMF warned Thursday that further loan payouts to Athens might be affected.
On Thursday, Olli Rehn, the European Union's economics commissioner, insisted that Greece push ahead with fiscal and structural reforms in spite of its political problems.
uhe/mkg (AP, Reuters)