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Unemployment in debt-ridden Greece hit new record highs in March as government officials wrangled over tough new austerity measures required to tap the country’s rescue funds.

The jobless rate increased to 16.2 percent in March from 15.9 percent in February, the country’s statistics agency said Wednesday. The total number of Greeks out of work was 811,340, up 40 percent from a year earlier, when the unemployment rate was 11.6 percent.

March’s is the highest level of joblessness recorded since the statistics agency began issuing figures in 2004. The government had projected an overall unemployment rate of 14.5 percent for this year in its 2011 budget.

The situation is expected to get worse as the government imposes yet more austerity measures to meet targets set out in the agreement for Greece’s euro110 billion ($161 billion) package of rescue loans.

Cutbacks and tax increases taken over the past year have already led to anger among workers and unions, which has been compounded by the realization that the measures did not produce all of the results they were expected to.

Ministers are now tussling over the details of additional cutbacks and tax hikes, including euro6.4 billion worth of remedial austerity measures for this year, and a midterm program to run from 2012-2015, two years beyond the current government’s mandate.

The government is also pushing through a euro50 billion privatization program that includes public utilities. Workers at state companies facing privatization have called their first strike against the plan for Thursday. Joined by much of the state sector in work stoppages, the strike will affect public transport, banks, post offices and the state television and radio stations.

Prime Minister George Papandreou is also faced with increasing frustration from within his own Socialist party _ and among his ministers _ over the new austerity.

Several Socialist lawmakers have criticized the measures, although none have said outright they oppose the plan, due to be voted on in Parliament by the end of this month.

Papandreou was holding a second day of consultations with his party deputies Wednesday before the Cabinet discusses the plan on Thursday and submits it to Parliament.

His finance minister, George Papaconstantinou, came under heavy fire from disgruntled deputies during a marathon meeting Tuesday.

Greek media reported that Vasso Papandreou, head of parliament’s financial affairs committee, accused Papaconstantinou of “lacking a plan and taking measures that will be short-lived.”

Labor Minister Louka Katseli said some of the proposed measures would be “re-evaluated.”

The government also appears shaken by sustained anti-austerity rallies in Greek cities, which climaxed on Sunday with tens of thousands of peaceful protesters in central Athens.

Papandreou suggested after an informal Cabinet meeting on Monday that he was open to holding a referendum on austerity measures, although government spokesman George Petalotis said the following day that there were no immediate plans for such a vote.

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French President Nicolas Sarkozy has met with Libya’s opposition leader amid questions about the death of a French military contractor in a Libyan rebel stronghold.

The meeting in Paris on Saturday came the day after Mahmoud Jibril, top representative of the Libyan Transitional National Council, met with U.S. officials in Washington.

Jibril did not speak to reporters on his way out of the meeting with Sarkozy.

France has been a major backer of the rebels, and France has played a leading role in the NATO campaign of airstrikes against Libyan leader Moammar Gadhafi’s forces.

The director of a French military contracting company was killed this week in rebel-controlled Benghazi, hours before he was supposed to meet with Jibril’s transitional government.

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Japan’s housing starts may post the first decline in 10 months as the nation’s strongest earthquake on March 11 sapped demand, halting the strongest recovery in the real estate market in almost 15 years.

Construction companies broke ground on 1.1 percent fewer homes in March from a year earlier, according to the median estimate of 23 economists in a Bloomberg News survey. The Ministry of Land, Infrastructure, Transport and Tourism is scheduled to release the data at 2 p.m. Tokyo time today.

“With the uncertainties and anxiety about the future, it will take time for people to actively buy new homes,” said Taro Saito, senior economist in Tokyo at NLI Research Institute Ltd. “The housing market will remain harsh throughout this year.”

Demand for new homes showed signs of recovery before the magnitude-9 temblor last month, with starts gaining for nine straight months, the longest streak since 1996. Prime Minister Naoto Kan last week proposed a 4 trillion yen ($49 billion) additional budget that’s likely to be the first of several packages to rebuild areas devastated by the temblor and tsunami.

“The recent earthquake could cool house buying sentiment for around three to six months, leading to a temporary decline in demand,” Masahiro Mochizuki, an analyst at Credit Suisse Securities (Japan) Ltd., said in a report. “However, from fiscal year 2012, we expect housing starts to receive a boost from demand that failed to emerge in 2011 from reconstruction.”

Housing starts probably dropped to the equivalent of an annual 814,000 units in March, the lowest since October, according to the median estimate of 18 economists surveyed.

Great Hanshin Earthquake

Last month’s quake and tsunami destroyed and damaged about 300,000 homes, forcing 130,155 people to stay in shelters throughout 17 prefectures and the capital, according to the National Police Agency.

The housing market boom in 1996 came about a year after the Great Hanshin Earthquake, when a magnitude-7.3 temblor hit Kobe and parts of western Japan on Jan. 17, 1995, according to the land ministry and Japan Meteorological Agency. Housing starts rose for 10 months through December 1996.

Shares of Daiwa House Industry Co., Japan’s largest home builder, fell 5.9 percent on the Tokyo Stock Exchange since the quake, while shares of Sekisui House Ltd., Japan’s second largest, dropped 6.6 percent.

Apartment Sales

The number of condominiums offered for sale in Tokyo and surrounding areas may drop 25 percent in April as developers withhold sales of some projects, the Real Estate Economic Research Institute said.

Annual condominium supply in Tokyo region, which rose for the first time in five years in 2010, probably won’t reach a forecast of 50,000 units this year because of a possible slowdown of Japan’s economy, said Akio Fukuda, a manager at Real Estate Economic Institute in Tokyo.

Last month’s quake and tsunami also damaged Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear plant, 220 kilometers (137 miles) north of Tokyo, causing radiation leaks.

“Apartment sales will be sluggish and it’s hard to tell when a recovery will take place at the moment,” said Mikio Namiki, an analyst at Mizuho Securities Co. in Tokyo. “With relatively big aftershocks and radiation leaks continuing, no one would be interested in buying a home now.”

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Gas prices have been spiking for weeks and $4 gas is quickly becoming a reality across the nation.

Illinois became the latest state to succumb, with motorist group AAA reporting Tuesday that the average price for a gallon of gas in the state had hit $4.03 a gallon. On Wednesday, the average price in Illinois nudged up to $4.04 a gallon.

There are now four U.S. states with gas prices above what many economists consider a ‘tipping point’ for consumers. Prices in California, Alaska and Hawaii have been above $4 a gallon for weeks.

As of Wednesday, the national average stood at $3.81 a gallon. While that’s still below the $4 mark, prices are up 24% from the start of the year.

A big culprit behind the surge has been oil. While gas prices typically start to rise at this time of year, $100 oil isn’t helping.

Based on current oil prices, there is a 33% chance that the national average gas price could hit $4 a gallon in July, said the Energy Information Administration in its April short-term energy outlook.

But the EIA isn’t ringing the $4 panic bell just yet, calling for gas prices to average $3.86 a gallon this summer. That would still translate into a whopping 40% rise from last summer.

Prices haven’t averaged $4 a gallon nationwide since July 2008. But many economists are already predicting the national average will top that level during the peak driving months from April to August.

"Prices are most likely going to hit $4 per gallon this summer," said Chris Christopher, senior economist at IHS Global Insight instant payday loan lenders.

That’s bad news for consumers, who have spent the last few years paying down debt but are still hamstrung by the weak job market and falling home prices. It’s also alarming because consumer spending is the main driver of economic activity in the United States, said Christopher.

"Consumers are not in a very good position right now coming out of a deep recession," he said. "We’re trying to get traction here with this anemic recovery, and rising gas prices are the last thing the American consumer needs."

IHS Global recently estimated that a sustained $10 increase in oil prices, which corresponds to a 25 cent rise in gas prices, could drive consumers’ energy bills $25 billion higher this year. That could have a jarring ripple effect on the job market, with IHS estimating job losses of 270,000 as businesses look for ways to cope with higher input costs, the group estimated.

All of that combined could cut U.S. economic growth by 0.4% in 2011, according to the IHS study.

"There is definitely a substantial impact to headline growth," said Sam Bullard, a senior economist at Wells Fargo.

Bullard acknowledged that the job market has shown some signs of improvement this year, and that credit is easier to obtain for many households. But he described the rise in gas prices as a tax on Americans, which has largely negated the federal payroll tax holiday enacted late last year.  

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Talks appear to be intensifying on Capitol Hill on reaching a deal on long-overdue legislation to finance the government through the end of September _ and avoid a government shutdown. Whether a shutdown can be avoided in three days’ time is another matter.

A White House meeting Tuesday that included President Barack Obama, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., failed to produce the hoped-for breakthrough, however, with a stopgap government funding bill set to expire Friday at midnight.

Obama ratcheted up the pressure afterward, sounding exasperated with Republicans for not warming to a White House proposal that matched, more or less, an earlier GOP framework proposed in February. In it, Democrats propose cuts netting $73 billion in savings below Obama’s original requests _ or $33 billion below current spending levels.

Boehner said yet again that there is no agreement on a level of spending cuts. And there’s been little progress on the 50-plus GOP policy “riders” dotting the House version of the measure.

“There’s no reason why we should not get an agreement,” Obama said. “We have now matched the number that the speaker originally sought. The only question is whether politics or ideology are going to get in the way of preventing a government shutdown.”

Talks also took place Tuesday between Boehner and Reid at the Capitol, with both sides reporting a productive discussion.

All sides say they don’t want a partial shutdown of government agencies that would close national parks, shutter passport offices and turn off the IRS taxpayer information hot line just a week before the April 18 filing deadline. But numerous other essential federal workers would stay on the job, including the military, FBI agents and Coast Guard workers. Social Security payments would still go out and the mail would be delivered.

There was at least a hint of flexibility Tuesday, accompanied by sharply partisan attacks and an outburst of shutdown brinksmanship.

According to Democratic and Republican officials, Boehner suggested at the White House meeting that fellow Republicans might be able to accept a deal with $40 billion in cuts. That’s more than negotiators had been eyeing but less than the House seeks.

The speaker’s office declined to comment, and Boehner issued a statement saying, “We can still avoid a shutdown, but Democrats are going to need to get serious about cutting spending _ and soon.”

Obama took his most forceful steps yet in trying to prod the stalled talks. He called the White House meeting, rejected a Republican proposal for an interim bill pairing additional spending cuts with a one-week plan to keep the government open, and then announced that Boehner and Reid would meet later in the day quick cash.

If they can’t sort out their differences, Obama said, “I want them back here tomorrow.”

At issue is legislation needed to keep the day-to-day operations of federal agencies going through the Sept. 30 end of the budget year. A Democratic-led Congress failed to complete the must-pass spending bills last year. Republicans stormed into power in the House in January and passed a measure with $61 billion in cuts that even some GOP appropriators saw as unworkable. It was rejected in the Democratic-controlled Senate.

Republicans also have added dozens of policy provisions concerning hot-button topics like abortion, global warming and the environment, and Obama’s health care law. Those appear as troublesome as finding agreement on what and how much to cut from agency budgets.

“What we can’t be doing is using last year’s budget process to have arguments about abortion, to have arguments about the Environmental Protection Agency, to try to use this budget negotiation as a vehicle for every ideological or political difference between the two parties,” Obama said.

Democrats said Boehner eventually would have to part company with tea party-backed lawmakers who propelled Republicans to power, and they accused him of reneging on an agreement to cut $33 billion, increasing the chances of a shutdown.

In return, Republicans accused Democrats of resorting to budget gimmicks to make it look like they favored deep cuts, when in fact they were finding ways to ease the potential pain.

Twin partial closures in the mid-1990s boomeranged on Republicans when Newt Gingrich was speaker, helping President Bill Clinton win re-election in 1996.

This time, it’s Obama who is exuding confidence as Boehner seems hemmed in by his hard-charging class of 87 freshmen, many of whom won office with backing from tea party purists.

On Monday, Boehner informed rank-and-file Republicans he would seek passage of a new stopgap bill, a weeklong measure that includes $12 billion in cuts and funds the Defense Department through the end of the year.

Obama rejected it. He said he would sign an interim bill only if one were needed to get the paperwork together on a broader agreement and pass it through both houses.

Meanwhile, 16 moderate Senate Democrats sent Boehner a letter urging against a shutdown that could harm the economy and instill hard feelings that would harm the chances of bipartisan cooperation on long-term fiscal challenges.

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Repercussions of Japan’s triple disaster came into clearer focus Monday after the World Bank said the earthquake and tsunami caused up to $235 billion in damage and health officials reported more cases of radiation-tainted vegetables and tap water.

Japanese officials reported progress over the weekend in their battle to gain control over a nuclear complex that began leaking radiation after suffering quake and tsunami damage, though the crisis was far from over, with a dangerous new surge in pressure reported in one of the plant’s six reactors.

The announcement by Japan’s Health Ministry late Sunday that tests had detected excess amounts of radioactive elements on canola and chrysanthemum greens marked a low moment in a day that had been peppered with bits of positive news: First, a teenager and his grandmother were found alive nine days after being trapped in their earthquake-shattered home. Then, the operator of the overheated nuclear plant said two of the six reactor units were safely cooled down.

“We consider that now we have come to a situation where we are very close to getting the situation under control,” Deputy Cabinet Secretary Tetsuro Fukuyama said.

Still, serious problems remained at the Fukushima Dai-ichi nuclear complex. Pressure unexpectedly rose in a third unit’s reactor, meaning plant operators may need to deliberately release radioactive steam. That has only added to public anxiety over radiation that began leaking from the plant after a monstrous earthquake and tsunami devastated northeastern Japan on March 11 and left the plant unstable. As day broke Monday, Japan’s military resumed dousing of the complex’s troubled Unit 4.

The World Bank said in report Monday that Japan may need five years to rebuild from the catastrophic disasters, which caused up to $235 billion in damage, saying the cost to private insurers will be up to $33 billion and that the government will spend $12 billion on reconstruction in the current national budget and much more later.

The safety of food and water was of particular concern. The government halted shipments of spinach from one area and raw milk from another near the nuclear plant after tests found iodine exceeded safety limits. Tokyo’s tap water, where iodine turned up Friday, now has cesium. Rain and dust are also tainted.

Early Monday , the Health Ministry advised Iitate, a village of 6,000 people about 30 kilometers (19 miles) northwest of the Fukushima plant, not to drink tap water due to elevated levels of iodine. Ministry spokesman Takayuki Matsuda said iodine three times the normal level was detected there _ about one twenty-sixth of the level of a chest X-ray.

In all cases, the government said the radiation levels were too small to pose an immediate health risk.

But Tsugumi Hasegawa was skeptical as she cared for her 4-year-old daughter at a shelter in a gymnasium crammed with 1,400 people about 80 kilometers (50 miles) from the plant.

“I still have no idea what the numbers they are giving about radiation levels mean. It’s all so confusing,” said Hasegawa, 29, from the small town of Futuba in the shadow of the nuclear complex. “And I wonder if they aren’t playing down the dangers to keep us from panicking. I don’t know who to trust.”

All six of the nuclear complex’s reactor units saw trouble after the disasters knocked out cooling systems. In a small advance, the plant’s operator declared Units 5 and 6 _ the least troublesome _ under control after their nuclear fuel storage pools cooled to safe levels. Progress was made to reconnect two other units to the electric grid and in pumping seawater to cool another reactor and replenish it and a sixth reactor’s storage pools.

But the buildup in pressure inside the vessel holding Unit 3’s reactor presented some danger, forcing officials to consider venting. The tactic produced explosions of radioactive gas during the early days of the crisis.

“Even if certain things go smoothly, there would be twists and turns,” Chief Cabinet Secretary Yukio Edano told reporters. “At the moment, we are not so optimistic that there will be a breakthrough.”

Growing concerns about radiation add to the overwhelming chain of disasters Japan has struggled with since the 9.0-magnitude quake. It spawned a tsunami that ravaged the northeastern coast, killing 8,600 people, leaving more than 12,800 people missing, and displacing another 452,000, who are living in shelters.

Fuel, food and water remain scarce. The government in recent days acknowledged being caught ill-prepared by an enormous disaster that the prime minister has called the worst crisis since World War II.

Bodies are piling up in some of the devastated communities and badly decomposing even amid chilly rain and snow.

“The recent bodies _ we can’t show them to the families. The faces have been purple, which means they are starting to decompose,” says Shuji Horaguchi, a disaster relief official setting up a center to process the dead in Natori, on the outskirts of the tsunami-flattened city of Sendai. “Some we’re finding now have been in the water for a long time, they’re not in good shape. Crabs and fish have eaten parts.”

Contamination of food and water compounds the government’s difficulties, heightening the broader public’s sense of dread about safety. Consumers in markets snapped up bottled water, shunned spinach from Ibaraki _ the prefecture where the tainted spinach was found _ and overall expressed concern about food safety.

Experts have said the amounts of iodine detected in milk, spinach and water pose no discernible risks to public health unless consumed in enormous quantities over a long time. Iodine breaks down quickly, after eight days, minimizing its harmfulness, unlike other radioactive isotopes such as cesium-137 or uranium-238, which remain in the environment for decades or longer.

High levels of iodine are linked to thyroid cancer, one of the least deadly cancers if treated. Cesium is a longer-lasting element that affects the whole body and raises cancer risk.

Rain forecast for the Fukushima area also could further localize the contamination, bringing the radiation to the ground closer to the plant.

Edano tried to reassure the public for a second day in a row. “If you eat it once, or twice, or even for several days, it’s not just that it’s not an immediate threat to health, it’s that even in the future it is not a risk,” Edano said. “Experts say there is no threat to human health.”

No contamination has been reported in Japan’s main food export _ seafood _ worth about $1.6 billion a year and less than 0.3 percent of its total exports.

Amid the anxiety, there were moments of joy on Sunday. An 80-year-old woman and her teenage grandson were rescued from their flattened two-story house after nine days, when the teen pulled himself to the roof and shouted to police for help.

Other survivors enjoyed smaller victories. Kiyoshi Hiratsuka and his family managed to pull his beloved Harley Davidson motorcycle from the rubble in their hometown of Onagawa. The 37-year-old mechanic said he knows it will never work anymore. “But I want to keep it as a memorial.”

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Security Council supporters of a no-fly zone over Libya were working Wednesday to persuade the group’s more reluctant members to back a U.N. resolution aimed at stopping Moammar Gadhafi’s planes from bombing civilians.

While Russia and Germany were expressing doubts, France was pushing for rapid action with Foreign Minister Alain Juppe saying in Paris that several Arab countries have pledged to participate in possible military action in the North African country.

Juppe wrote on his blog Wednesday that France and Britain have sought targeted air strikes for two weeks and said two conditions are necessary: a Security Council mandate for such force and “effective” participation by Arab states. “Several Arab countries assured us that they will participate,” Juppe wrote, without elaborating.

Lingering doubts among some members over a no-fly zone were immediately apparent after a proposed resolution was introduced Tuesday afternoon in the 15-member U.N. Security Council. Britain’s U.N. Ambassador Mark Lyall Grant said council members will discuss the proposed resolution “paragraph by paragraph” when they meet Wednesday because members had “a number of questions about the text.”

Chinese Ambassador Li Baodong said issues to be clarified include whether the ban would apply to all flights countrywide. Indian Ambassador Hardeep Singh Puri said he and other members need to know what countries would contribute the assets for enforcing a no-fly zone.

Lebanon, the Security Council’s only Arab member, introduced the no-fly provisions of the draft resolution _ strongly endorsed by the Arab League _ to council members at a closed meeting Tuesday afternoon. The Arabs are strongly backed by France and Britain, which drafted elements of a no-fly resolution last week.

“We are deeply distressed by the fact that things are worsening on the ground, that the Gadhafi forces are moving forward extremely quickly, and that this council has not yet reacted,” France’s U.N. Ambassador Gerard Araud told reporters as he headed into the council’s Tuesday meeting.

France and Britain failed to win support for a no-fly zone during a two-day meeting of Group of Eight foreign ministers in Paris earlier Tuesday and the G-8’s final communique did not mention a flight ban. It instead warned of unspecified “dire consequences” if Gadhafi did not honor the Libyan people’s claim to basic rights, freedom of expression, and representative government.

The halting efforts to raise pressure against Gadhafi’s 42-year regime came as his forces used tanks, warships and artillery Tuesday to gain ground near the rebels’ base in eastern Libya.

Lebanon’s U.N. Ambassador Nawaf Salam said the section on the no-fly zone was drafted in consultation with Libya’s U payday loans in one hour.N. diplomats, who have denounced Gadhafi and back opposition forces. Salam said another section on “the strengthening and widening of sanctions” on Libya was introduced by Britain.

The Arab League called Saturday on the U.N. “to shoulder its responsibility … to impose a no-fly zone over the movement of Libyan military planes and to create safe zones in the places vulnerable to airstrikes.”

Salam said Lebanon has asked Libya’s U.N. Mission to identify specific areas where civilians would need protection and safe passage corridors.

The Security Council on Feb. 26 imposed an arms embargo on Libya and ordered all countries to freeze assets and ban travel for Gadhafi and some close associates. It also referred the regime’s deadly crackdown on protesters to the International Criminal Court, for an investigation of possible crimes against humanity.

U.N. diplomats said the proposed new resolution would call for more muscular enforcement of the arms embargo, add names of individuals, companies and other entities to the list of those subject to travel bans and asset freezes, and ban commercial flights bringing arms or mercenaries into Libya.

The draft resolution would also authorize states to work together to provide humanitarian assistance and take necessary measures to protect civilians. It also would establish a panel of experts to monitor implementation, the diplomats said, speaking on condition of anonymity because the text has not been released.

Russia’s Foreign Minister Sergey Lavrov said at the G-8 that his country wants more details and clarity from the Arab League about its proposals for Libya before approving any military intervention, and German Foreign Minister Guido Westerwelle said his country was “very skeptical” about military action.

Lebanon’s Salam insisted that a no-fly zone “in no way could qualify as a foreign intervention.”

“I would hope that the establishment of a no-fly zone would have a deterrent effect on the Gadhafi regime, not to fly its airplanes to attack civilian areas,” he said.

The White House said President Barack Obama on Tuesday instructed his national security team to “fully engage” in discussions at the United Nations, NATO and with countries and organizations in the region when reviewing options to increase pressure on Gadhafi.

Obama and his top national security aides have been cautious with calls for a no-fly zone, which the Pentagon has described as a step tantamount to war. The U.S. fears it could further strain its already stretched military and entangle the country in an expensive and messy conflict.

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The top U.N. envoy in Ivory Coast said Friday that getting internationally recognized president Alassane Ouattara back home will be “more complex than you can imagine” after the man clinging to power imposed a no-fly zone for U.N. aircraft.

Choi Young-jin made the comment to reporters Friday as he also expressed alarm about a growing number of attacks against U.N. personnel in the volatile West African country that was plunged into political chaos after the disputed Nov. 28 election.

More than 400 people have been killed in violence, most of them supporters of the internationally recognized winner Ouattara. He left the country this week for the first time since the crisis began, and sitting president Laurent Gbagbo subsequently ordered U.N. aircraft out of Ivorian air space.

The decision was ignored by the U.N., which continued to patrol the city from the air, but the timing of the announcement appeared to indicate that Gbagbo may try to prevent Ouattara from returning.

Ouattara met with African leaders Thursday in Ethiopia, where the African Union reaffirmed him as the legal president of Ivory Coast and said the country’s highest court now must swear him in.

It’s unclear how the AU plans to force Gbagbo to step down. He has refused similar calls from other world and regional bodies, including the U.N. Security Council and the regional bloc ECOWAS, which had warned that it would use all the means necessary, including an armed intervention to force Gbagbo out.

On Friday, Choi said that Ivorians have been directly shooting at U.N. peacekeepers, while other U.N. personnel have been kidnapped and hijacked. He blamed the attacks on propaganda from Gbagbo supporters. Gbagbo unsuccessfully ordered thousands of peacekeepers to leave after the U.N. certified results showing Ouattara won the election.

“I strongly warn those who invent and propagate those hate stories: Do not have illusion that you can do it with impunity,” Choi said. “UNOCI is currently gathering information documenting your acts, which constitute war crimes. We will have all the evidence allowing the judge to make you accountable.”

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EAST ST. LOUIS

Greece’s economy has been rescued from the “abyss” as austerity measures aimed at restoring order to public finances “are being implemented as planned,” the European Union and International Monetary Fund said.

“While there have been some delays and shortfalls, it should not undermine the fact that the program is broadly on track,” Poul Thomsen, head of the IMF’s Greece mission, told a news conference in Athens today. “We are ready for the second phase of the program, having successfully pulled the economy from an abyss.”

Greece’s fiscal health still requires a “broad base of structural reforms” to underpin a sustainable recovery, he said. The second phase will focus on a tax overhaul and state- asset sales that may raise as much as 50 billion euros ($68 billion) by 2015 to pay down debt, while further salary cuts and levy increases have been ruled out for the medium term, Servaas Deroose, a European Commission economist, told the briefing.

Thomsen and Deroose were in Athens for a quarterly review of Greece’s progress under a 110 billion-euro EU-IMF bailout it received last May to avert default. Approval of Greece’s efforts will ensure payment of the plan’s next installment of 15 billion euros in March. Deroose said he’s “confident” the funds will be disbursed.

Shares Advance

Shares in state-controlled banks shot up after the remarks by Deroose, who said an estimated 15 billion euros may be raised in 2011 and 2012 by selling commercial real estate and stakes in companies, both listed and unlisted. Hellenic Postbank SA gained 10.5 percent, Attica Bank SA rose 9.7 percent and Agricultural Bank of Greece SA added 13.2 percent at 4:45 p.m. in Athens. The government will complete the sale of the 110-year-old Postbank in 2011, according to a commission report released in December pay day advance.

Greece has vowed to trim the budget gap to 7.4 percent of gross domestic product in 2011 from 9.4 percent in 2010. The EU and the IMF said today the 2010 deficit was about 9.5 percent. Fallout from Greece’s crisis led to a surge in bond yields of distressed euro-area nations as investors shunned their debt.

The yield on Greece’s 10-year bond remained at a euro-area high of 11.15 percent today. The extra yield that investors demand to hold the 10-year security instead of German bunds was at 824 basis points compared with 811 basis points yesterday and a record 973.6 basis points on Jan. 7.

Austerity Moves

Prime Minister George Papandreou’s wage and pension cuts and sales-tax increases in return for the emergency loans from the EU and the IMF have contributed to a slump in demand, with Greece’s economy shrinking an estimated 4.2 percent last year. EU and IMF officials today stuck to forecasts for a 3 percent contraction this year.

Finance Minister George Papaconstantinou said earlier this month he was confident a comprehensive package from the EU would stem borrowing costs and allow Greece to return to international markets for financing this year. The country is banking on lower lending rates on the EU-IMF loans, as well as an extension of the maturities, to help assuage market fears of a Greek default.

Greece may return to markets no later than early next year, Thomsen said today, adding that external conditions aren’t “as favorable as expected.”

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