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D-Day for Greece as investors have hours to decide whether to back deal

GREECE’S private investors have hours to decide whether to accept a massive writedown of the country's debts.

If too few investors agree and the swap fails, the crisis-hit country is likely to default on its debt in less than two weeks.

Athens is asking creditors to swap their Greek bonds for new ones, in an exchange intended to slice about €107bn off Greece's privately held debt.

By early Thursday, banks, pension funds and other investors holding more than half the €172bn total had publicly pledged to take part.

New legislation will allow Greece to force holdouts into accepting the deal if overall participation is not high enough.

Investors have until 8pm today to state their intentions on the exchange.

Greek Prime Minister Lucas Papademos will hold a cabinet meeting this afternoon, including a briefing by finance minister Evangelos Venizelos on what’s ahead for Greece to finalise the second bailout package.

Economists believe that even if Greece's debt swap goes through, the country will require "real debt relief" within the next 12 months to put the country on a stable path.

Hopes for a positive outcome of the debt swap pushed European shares higher today.

Shares were in positive territory yesterday but slumped on Monday.

World markets made significant gains as weak US unemployment figures failed to stamp out renewed hopes that Greece will close a deal to ease its debt burden.

Wall Street's Dow Jones Industrial Average was 0.4pc higher despite the Labor Department revealing that the number of Americans seeking unemployment benefits rose more than expected.

In London, the FTSE 100 Index shrugged off the figures to stand 1pc or 54 points higher at 5845.8 in a clear sign that investors expect a positive outcome in Greece's debt swap with private investors - the result of which is not expected until early tomorrow.

The gains in European markets were even stronger, with the Dax and Cac 40 in Germany and France both up by nearly 2pc.