GREECE was facing the prospect of fresh elections yesterday after the party that finished first in Sunday's vote failed to form a coalition.
Antonis Samaras, leader of the conservative New Democracy party, admitted defeat in talks to form a government after being rebuffed by anti-austerity parties who made spectacular electoral gains. His party finished first but with a much-reduced share of the vote.
"I did whatever I could to secure a result but it was impossible," he said after a day of meetings with other leaders.
New Democracy and Pasok, which alternated control of Greece for 38 years, lacked the combined strength for an absolute majority in the 300-seat parliament after a being firmly rejected by voters angry at their six-month coalition, which passed the recovery plan.
Mr Samaras said he had "returned the mandate" to President Carolos Papoulias, who will today invite Alexis Tsipras, the charismatic 37-year-old head of Syriza, an acronym for the Radical Left Coalition, to form a coalition after it finished in a surprise second place.
Mr Tsipras said he would seek to form a left-wing alliance to reject the loan agreement's "barbaric" austerity measures, which have led to government wages and pensions being cut by up to 30pc.
Two-thirds of Greek voters backed Syriza and other anti-austerity parties, who between them could muster 151 seats. But the chances of them co-operating are regarded as near impossible.
Syriza and the Communist Party of Greece are highly unlikely to co-operate with the Independent Greeks, a new nationalist party that finished fourth.
If Mr Tsipras fails, Pasok -- which was the only party that conditionally agreed to join New Democracy in efforts to pursue an austerity package for the next stage of the €110bn bailout agreed with the European Union and International Monetary Fund late last year -- would have the chance to lead a government, but would almost certainly fail for the same reasons that defeated Mr Samaras.
If no coalition emerges, Greece will hold another election, a prospect that would alarm its international creditors and further trouble the markets.
The Greek stock index fell almost 7pc yesterday. (© Daily Telegraph, London)