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Greece races to form new coalition government after pro-bailout victory

Greece raced to form a coalition with broad support by the end of Monday after an election victory by pro-bailout parties which eased fears of a Greek eurozone exit and brought relief to world markets.

“There is a categorical imperative to form the government” today, President Carolos Papoulias said before giving a formal mandate for negotiations to conservative leader Antonis Samaras, whose New Democracy party won the election.

Speaking shortly after the result was announced, Samaras said Greeks voted to stay in the euro, foster growth and respect the country's international commitments.

“This is a victory for all of Europe,” he said. “I call upon all political parties who share these objectives to join forces and form a stable new government.”

Samaras repeated campaign promises to honor the country's bailout pledges.

“We will work together with our partners in Europe in order to supplement the current policy mix with growth enhancement policies,” he said. “We are determined to do what it takes and do it fast.”

The 61-year-old Harvard-educated Samaras said: “A national agreement is an imperative called for by everyone. We need to resolve the question immediately.”

He also said there should be amendments to the conditions of an EU-IMF bailout deal “so the Greek people can escape from today's torturous reality.”

Final results presented to President Karolos Papoulias gave New Democracy 29.66 percent, followed by the Syriza radical left coalition at 26.89 percent. The extreme far-right Golden Dawn party, whose members have been linked with violent attacks on African and Asian immigrants, came fifth with 6.92 percent; it won 18 seats — down from the 21 it collected on May 6.

New Democracy won 129 of the 300 parliamentary seats in Sunday's vote, including the 50-seat boost given to the election winner, opening the path for a coalition with the third placed socialist party PASOK, which has 33 but has called for other leftist parties to be included.

The anti-austerity leftist Syriza party and its firebrand leader Alexis Tsipras came second with 71 seats. It has ruled out joining a coalition, saying the harsh conditions for the bailout deal should be scrapped altogether.

Europe and the United States urged Greece to act quickly to form a new government and proceed with urgent reforms in order to meet the terms of bailout loans.

“It would be disastrous to continue salary and pension cuts,” Tsipras said.

“There must be a government soon, and we must take on the role of the main opposition party, to keep the government in check,” he said.

The eurozone is hoping the result can draw a line under a lengthy period of uncertainty that has unsettled markets.

Global stock markets initially rallied after the result and the euro rose against the dollar but those gains quickly petered out.

In foreign exchange deals on Monday, the euro was just up, at US$1.2648 from US$1.2644 late on Friday in New York.

The Athens stock exchange hit 7 percent before midday but the gains were clipped to 4.09 percent in late afternoon trade.

“There is no alternative to a coalition between the right and the socialists since the key issue at stake was the formation of a pro-euro government,” Thomas Gerakis, head of the Marc polling institute, told AFP.

Sunday's election was the most critical for Greece since the end of military rule in 1974 and was particularly significant for Europe as Greece is where the debt crisis kicked off in 2009 before spreading across the continent.

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