Greek parties agree coalition deal

The three parties backing Greece's bailout deal have agreed to form a coalition government and are negotiating final details.

The three parties backing Greece's bailout deal have today agreed to form a coalition government and are negotiating final details.

The agreement follows protracted negotiations between the conservative New Democracy party, the Socialist PASOK and the smaller Democratic Left party, after a national election on Sunday. New Democracy won the vote but needs other parties to form a majority coalition.

Democratic Left spokesman Gerasimos Georgatos said his party is committed to joining a government headed by the conservatives.

"We are offering a vote of confidence, not a vote of tolerance," he said. "We will be part of the government. That means that even if we disagree on a specific draft law, we will not withdraw our support or bring down the government."

The parties are still discussing the new government's policy platform and who will be given cabinet positions.

"We will have a government today," said a PASOK spokesman.

Creation of a pro-bailout coalition with a strong parliamentary majority would end weeks of political uncertainty in Greece that has affected markets worldwide.

A inconclusive election on May 6 had led to protracted, failed talks on forming a new Greek government and threatened to plunge Europe deeper into its financial crisis.

The June 17 vote raised fears that anti-bailout parties would win and end up having Greek leave the 17-nation eurozone.

Greek stocks rose on expectations a government can be formed, gaining more than 2%.

In both elections, Greek voters angry at years of income cuts, deteriorating state services and galloping unemployment voted strongly for parties promising to end the hardship by tearing up the country's pledges for continued austerity and reforms.

However, the anti-austerity standard bearer - the radical left Syriza party - finished a narrow second in Sunday's election that gave New Democracy 129 of Parliament's 300 seats.

But this time, the conservatives can form a strong parliamentary majority of 179 legislators with the third-placed PASOK and Democratic Left.

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