A second attempt to form a viable Greek government has failed, leaving that task to the socialist PASOK party. Failure will bring indebted Greece closer to holding repeat elections next month.
Greece's radical left Syriza party, the second-placed winner of Sunday's parliamentary elections, has followed the example of the conservatives by failing to form a government.
Socialist leader Evangelos Venizelos, whose PASOK party came third in the poll with a mere 13 percent, says he will seek a fresh presidential mandate to form a coalition.
The vote, in which Greek voters largely rejected an international bailout requiring austerity measures and punished the two mainstream parties, PASOK and the conservative New Democracy, had left no party with enough seats to govern alone.
That uncertainty on Wednesday further weakened stock markets and the euro as fears resurfaced that Greece might renege on bailout arrangements and quit the eurozone before year's end.
News agency AFP said it had been told by a "European government source" that Greece would receive a 4.2-billion-euro ($5.4 billion) tranche of bailout funds on Thursday, but a further one billion would be held back until a meeting of eurozone finance ministers in Brussels next Monday.
Warning to Greeks from Luxemburg's Asselborn
Should PASOK's Venizelos also fail to put together a governing coalition, President Carolos Papoulias will call on all elected officials to form a "unity" government. If this cannot be done by May 17, new elections will be announced.
EU leaders alarmed
EU leaders have reacted with alarm to suggestions by leaders of the previous PASOK-New Democracy coalition that the bailout agreement, which they signed on March 9 with the EU and International Monetary Fund (IMF), could be amended.
Luxembourg Foreign Minister Jean Asselborn on Wednesday urged Greece to install a stable government.
"We have to say to the Greek people right now that the situation is serious, that no European Union country will be able to release even a portion of the 130 billion euros for the Greeks if there is no functioning government that respects the rules and manages the disbursed money," Asselborn said.
In Berlin, German Finance Minister Wolfgang Schäuble spoke of austerity cuts and reforms in return for loans, saying: You can't have one without the other."
Gikas Hardouvelis, an economics advisor to Greece's outgoing technocrat prime minister Lucas Papademos, warned on Wednesday that rejection of austerity measures would have severe consequences.
"If we say no to everything, [then] we leave the eurozone," Hardouvelis said.
The leader of the conservatives, Antonis Samaras, said he had explained to the head of Syriza, Alex Tsipras, that his radical left's rejection of the international bailout deal would lead Greece back into "immediate bankruptcy" and departure from the euro.
"I will not do that," said Samaras.
ipj/rc (AP, AFP)