A disorderly Greek default would cause more than a €1,000bn of damage to the eurozone and could leave Italy and Spain dependent on outside help to stop contagion spreading, the main bondholders group has said.

Ireland is a source of inspiration for Italy in the way it is handling the crisis and returning to growth, Italian prime minister Mario Monti told Enda Kenny following a meeting in Rome.

Eurozone finance ministers will meet in Brussels this evening, when they expect to finalise details for a second bailout for Greece together with cuts on bondholders that will trigger a temporary selective default.

Greek prime minister Lucas Papademos was yesterday shuttling over and back between the troika, the creditor banks and political party leaders desperately trying to conclude a deal on new austerity measures.

Crisis talks on a debt deal for Greece will continue today after a five-hour meeting between the prime minister and coalition government party leaders failed to reach agreement.

Crisis talks in Greece for huge new debt deals will continue tomorrow, leaders of parties supporting the country’s coalition government have said .

“Crucial” issues remain to be resolved in Greece’s critical negotiations over a second multi-billion euro international bailout as talks continue today.

Greek Prime Minister Lucas Papademos says he has the backing of leaders from the three political parties supporting his interim government, as international creditors increase the pressure on Greece to make deeper spending cuts to secure new funding.

Greece’s prime minister resumed talks tonight with top bank negotiators to try to overcome obstacles to a major debt-relief deal needed to avoid bankruptcy.

As Athens is caught in the middle of a game of brinkmanship with its creditors, the EU warned they wanted new reforms even before they sign up to the second bailout and its austerity programme.

Germany and France pressed yesterday for a rapid deal between Greece and its private creditors that would return its soaring debt to sustainable levels, and said they remained committed to a new bailout that is needed by March to avert a disastrous default.

Greece’s government has said that negotiations with private creditors aimed at lightening Greece’s debt load have been suspended unexpectedly and that the creditors’ representative has left Greece.

Greece has resumed talks with its private creditors in the hope of sealing a debt relief deal needed to avoid a disastrous default.

GREECE sent senior officials to Washington yesterday for meetings with the International Monetary Fund as it raced against the clock to break a deadlock in debt swap talks that has raised fears of an unruly default.

Crucial negotiations between the Greek government and its private creditors on a bond swap deal needed to avoid default appeared close to collapse today.

GERMAN Chancellor Angela Merkel and the International Monetary Fund’s managing director, Christine Lagarde, will meet in Berlin tonight as pressure grows to complete the Greek debt swap needed to put a rescue plan in place.

Greece’s prime minister is due to hold talks with labour unions and trade federations ahead of a crucial visit by the country’s debt inspectors while Athens negotiates the terms of a second multimillion-euro international bailout.

Police guarding Greece’s parliament have fired tear gas and stun grenades to disperse rioting youths, as thousands marched through Athens in an annual protest to the US embassy.

EUROPE and its troubled currency appears to be finally reaping the rewards of a litany of summits this year designed to draw a line under the region’s debt crisis.

GERMAN Chancellor Angela Merkel will seek backing from German lawmakers to bolster the euro bailout fund on the same day she heads to a European summit as banks joust with leaders over the size of losses they take on Greek bonds.

GERMAN banks are preparing for losses of as much as 60% on their Greek government debt holdings as European officials push for more private-investor involvement in a rescue of the debt-stricken country.

THE European Central Bank is “being stretched” in its current role as buyer of last resort for European sovereign debt, the head of a global association of financial institutions has said.

MOODY’S cut Greece’s credit rating further into junk territory yesterday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.

THERE was something for everyone, with a little more for the banks and less for the taxpayer, in the deal that emerged from the 10 hours of negotiations by eurozone leaders at the euro summit on Thursday.

EXPERTS are working overtime to come up with a second Greek bailout worth about €120 billion for Thursday’s emergency eurozone summit.

EUROZONE finance ministers held crisis talks yesterday in a desperate bid to come up with a solution to the Greek debt problem and avoid the euro debacle escalating to include Italy.

EUROPE bought time this weekend to avoid a Greek bankruptcy, but tough negotiations lie ahead to save Athens and prevent the eurozone debt crisis from descending into global drama.

GREECE’S government and opposition parties came under intense pressure from their EU colleagues to adopt and work through a new austerity package at last night’s summit in Brussels.

The US Federal Reserve chairman has spoken about the US recovering from what many believe to be the mildest recession on record.