Coalition hopes in doubt as Greek parties meet

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Greek Socialist leader Evangelos Venizelos meets conservative Antonis Samaras on Friday in a possibly doomed attempt to form a government and avoid a repeat election, while EU leaders are warning that Greece's membership of the euro is at stake.

Voters enraged by record unemployment and a deep recession punished both the Socialists and conservatives - the only two parties backing an EU/IMF bailout - in an election on Sunday, backing smaller parties that reject the wage cuts and tax hikes required in return for international aid.

Venizelos is the third and last political leader to try to form a government after the election, which resulted in a hung parliament.

Chances of clinching a coalition deal are slim and officials said this was in any way unlikely before talks move to the next stage when the president asks all political leaders to make one final effort before new elections are called.

Venizelos, a former finance minister who negotiated Greece's second, 130-billion euro bailout, will meet Samaras, whose party was reluctantly part of the government which struck the rescue deal, at 0700 GMT. The two parties jointly have 149 seats in parliament, two short of a majority, and cannot rule alone.

Any last hopes of putting together a coalition rest on Democratic Left leader Fotis Kouvelis, a moderate who emerged from a meeting with Venizelos on Thursday proposing an all-party government that would keep Greece in the euro while detaching it from the bailout deal.

Kouvelis' party won 19 seats in the election but its popularity has fallen slightly since, while the more hardline Left Coalition SYRIZA which failed earlier this week to form an anti-bailout coalition, is now the most popular party in Greece, an opinion poll showed on Thursday.

"There is a very slim chance for a coalition if Kouvelis agrees," one socialist party official said. "But his party is split right down the middle."

The political deadlock prompted warnings by European leaders that Greece could be thrown out of the euro if it does not stick to the spending cuts and economic reforms required by the bailout, which is the only thing keeping Athens from a messy bankruptcy.

"We do not have an infinite amount of time. Time is flying because there are financing needs, but the first steps have to be taken now from the Greek side," European Central Bank governing council member Ewald Nowotny said in Vienna.

German Finance Minister Wolfgang Schaeuble said Europe and the International Monetary Fund were still determined to help Greece, but the country could not be helped if it did not help itself.