Here's the latest take on the crisis in Greece from our Athens correspondent, Helena Smith:

The fate of Greece is, on Tuesday night, in the hands of the leader of a far-left party who launched the quest to form a government by declaring the country could no longer commit itself to the terms of an international loan agreement keeping its economy afloat. After accepting a mandate to create a multi-party administration following inconclusive elections, Alexis Tsipras sent shockwaves through financial markets by announcing the pledges Athens had made to secure rescue funds from the EU and IMF were null and void. "The popular verdict clearly renders the bailout deal null," said the politician, whose stridently anti-austerity coalition of the radical left, known as Syriza, sprung the surprise of the weekend's poll, coming in second with 16.8% of the vote. "This is an historic moment for the left and the popular movement and a great responsibility for me."

Full details here.



That's also a good moment to stop this live blog for the day. Many thanks for reading, commenting, and helping. I'll be back tomorrow. Until then, goodnight.

A US hedge fund that specialises in currencies has predicted today that Greece could leave the euro as soon as next month.

It's a bold claim that wil grab headlines, but John Taylor of hedge fund FX Concepts argues that a Grexit is now inevitable, given the deadlock following last Sunday's election.

Appearing on Bloomberg TV, Taylor said:



The Europeans aren't going to give them the money, the International Monetary Fund's not going to give them an OK. They will be out of money in June.

More details here.

It's certainly true that without a new government, Greece will struggle to meet the targets set by its lenders. Under the terms of its aid deal, it is soon meant to agree the precise details of several billion euros worth of cuts, which have only been agreed in principle.

Analysts at Investec are taking a different view than Taylor, though. They argue that recent political events across Europe will actually help Greece remain in the euro. Here's the logic:

Francois Hollande's victory in France was well flagged. An optimistic way of viewing this is in the context of the political tide moving from 'pure' austerity towards attempting to promote economic growth. Note that a Land election in Schleswig-Holstein in Germany resulted in losses for Angela Merkel's CDU, while Italian local elections appear to have resulted in a surge in the vote for protest parties, with former leader Silvio Berlusconi's PDL party faring particularly badly. In this respect, these changes could reduce Greece's isolation, perhaps in relaxing some of its targets to keep its bailout cash flowing, hence staving off a hard default and Greece leaving the euro, at least in the near-term.

Italian prime minister Mario Monti has predicted that Germany will soon cave in over its opposition to eurobonds.

Monti told reporters in Rome this evening that Europe will soon start using collective borrowing to ease the crisis. He said:

I am convinced it will happen, not immediately, but the time is getting nearer and I consider it positive and important.

Opponents of eurobonds argue that it is wrong to allow weak, fiscally irresponsible nations to borrow at affordable terms because other, stronger countries will guarantee the debt. However, they could be more palatable to Berlin once tighter fiscal rules have been implemented.

Faisal Islam, Channel Four's economics editor, is in Athens today. He's been meeting with members of Syriza, and it appears that the group is using the risk of Greece leaving the eurozone as a weapon with which to force better terms out of its international partners.

I asked top Syriza official if Greek euro exit was a card to play: "that's what we insist we will use in hard negotiations with The Troika" — Faisal Islam (@faisalislam) May 8, 2012

That could be a dangerous game to play. As Capital Economics argues this afternoon, there is a theory that any Greek exit from the eurozone would be fairly "orderly". It wrote:

It could potentially trigger similar outcomes among other smaller countries, but it would be very unlikely to result in the departure of a large economy from the region. Indeed, there may be a growing perception that the euro-zone would end up stronger once the dust had settled, aided perhaps by a more growth-friendly policy agenda, championed by the new French president.

However....





Although we agree with this prognosis, we would be surprised if the reaction in the financial markets remained quite so sanguine if and when Greece did leave the euro-zone, given the huge amount of associated uncertainty.

Today's developments in the Greek crisis have hit the US stock market too, where the Dow Jones index is down 139 points, or 1.08%, at 12869.

The prospect of a second Greek election next month, or a disorderly break-up of the eurozone, is forcing shares lower. Just three of the 30 companies that make up the Dow are in positive territory.

As Bruce McCain, chief investment strategist at Key Private Bank, put it:

We had a little bit of a letup in worry about Europe, but now have decided that chaos is not a good thing.

Chaos feels too strong a word to describe the situation in Greece today, where the democratic process is taking its (bumpy) course. But it's a sign of the global concern over the eurocrisis.

New is breaking on the wires that Evangelos Venizelos, leader of the Pasok party, is refusing to renege on pledges to implement the terms of Greece's aid package.

Venizelos, who was finance minister when the deal was agreed, followed rival Antonis Samaras (see 5.30pm) in rejecting the demand, made today by Alexis Tsipras of the Syrisa group.

Venizelos said Greece's future must lie in a wider "unity government", based around parties who want the country to remain within the euro. Such a coalition could mean a second election could be avoided -- but it seems a 'tough ask'.

Venizelos said (via Reuters):

I call on all Greek citizens to support...proposals for a national unity government consisting of all forces wanting Greece in Europe, and in the euro.

Our European editor Ian Traynor argues this evening that Germany actually has little to fear from the next president of France.

As I blogged at 11.23am, European leaders will be attending an 'informal' meeting on 23 May. That will be François Hollande first working dinner with his fellow European leaders. Ian reckons that Hollande and Merkel, two "centrist pragmatists", will manage to find common ground over the tricky issues of growth and fiscal consolidation. He writes:

As Europe wrestles with its great predicament, Hollande faces charges that he is a "dangerous" tax-and-spend Keynesian out to reverse the fiscal and monetarist rigour of the Germans and trick them into pooling eurozone debt by issuing eurobonds. Crisis sorted. To judge by his aides, his programme and his statements, however, Hollande is nothing of the kind. The French would like eurobonds, if they could get them. But with Berlin saying nein for the foreseeable future – though without ruling them out, eventually – Paris is not pushing.

If you're just catching up with the day's events.... the key development came this lunchtime, from Alexis Tsipras of the coalition for the Radical Left.

Immediately after being handed the mandate to form a government, Alexis Tsipras said he could only form a a deal with one of the other Big Two parties if they wrote to Brussels and said they no longer supported Greece's economic reforms.

Here is the key quote that Tsipras gave to reporters in Athens:

The bailout parties no longer have a majority in parliament to vote for measures that plunder the country..... There will be no 11 billion euros ($14 billion) of additional austerity measures; 150,000 jobs will not be cut.

Tsipras went on to meet Democratic Left leader Fotis Kouvelis, and won his backing.

Antonis Samaras, the head of the New Democracy party which won the most seats in Sunday's election, has rebuked Alexis Tsipras for his comments today.

In what reads like a magisterial rebuke to his younger rival (37), Samaras (who turns 61 this month), said he hoped Tsipras "regains his senses" by the time the pair meet later this week.

Samaras made it clear that he would not take up Tsipras's invitation to renege on his commitment to enforce the terms of Greece's aid package. Indeed, he accused the Radical Left leader of "doing his utmost" to prevent a unity government being formed. Samaras said:

Hearing Mr Tsipras, we realize he has no intention of guaranting Greece's European identity.

Samaras added that he was not prepared to "sign Greece's destruction". However, he did indicate that New Democracy could provide support for a minority government.

(for balance, Tsipras's position is that the Greek people have emphatically rejected the deal, with 2/3rds of votes going to parties who don't support the terms of the bailout).

On Monday, Samaras found that he was unable to form a coalition (despite winning 108 of the 300 seats in the Athens parliament). Thus Tsipras got his chance today.

Mining giants and financial stocks were the biggest fallers in London today. That reflects fears that the eurozone crisis could derail global growth, and provoke a new crisis in the banking sector.

Here are the five biggest fallers.

Today's heavy losses in European stock markets (see last post) came as City analysts became more convinced that a second Greke election will be needed. The ballot could easily come in the middle of next month.

The slump in support for the two main parties, who both supported the current Greek bailout, appears to make it more likely that we could end up with an Athens government that opposes the terms of the €130bn loan deal agreed earlier this year.

Malcolm Barr, an economist at JPMorgan Chase & Co, warned clients that:



A Greek return to the polls in mid-June looks increasingly likely... There is little doubt that the drop in support for New Democracy, Pasok has raised the probability of an eventual euro exit.

The FTSE 100 has suffered a triple-digit fall today as the escalating crisis in Greece hit stock markets around the globe.

The blue chip index shed 100 points to close at 5554, a fall of nearly 1.8%. That means that the Footsie has now lost all the gains made during 2012.

Other European markets also took tumbles. Germany's Dax lost 1.95%, France's Cac fell 2.8%, while Spain's Ibex dropped 0.8% and Italy's FTSE MIB closed 2.37% lower. This came after the Athens stock market lost 3.6% to close at its lowest level for almost twenty years (see 3.45pm).

The selloff was sparked by Alexis Tsipras, the leader of the Syriza coalition, who insisted today that the terms of Greece's aid deal were now 'null and void' (see 1.38pm). Tsipras made his position clear immediately after being handed the mandate to form the next Greek government (Syriza won the second highsst share of the vote in Sunday's election).

City analysts said that the odds of a Greek exit from the euro are steadily shortening, leaving traders anticipating fresh stock market chaos.

Joshua Raymond, chief market strategist at City Index, said:



The violent swings we have seen in European equity markets over the past few days are concerning as they show indecision by investors, who are unsure of how to position themselves in the midst of the political uncertainty in Greece and the likely domino effect on the country's ability to service its debts.

And Ben Critchley, sales trader at IG Index, commented:

Once again a relatively quiet morning has given way to a more frenetic afternoon. The cause can reasonably be ascribed to comments from a Greek politician of whom no one had heard until yesterday, Alexis Tsipras. The market in Athens plunged to a 20-year low as Mr Tsipras, who leads the left-wing Syriza party, said that the bailout deals agreed by Greece and its Troika partners were now invalid, since 70% of Greeks had voted against them.

Tsipras has until Thursday to form a coalition government, which is a tricky task given the results of Sunday's election (details here). He has already been rebuffed by the KKE communist party.

Jörg Asmussen, a member of the European Central Bank's executive board, has warned Greece's political leaders that they cannot renegotiate their bailout agreement.

Responding to Alexis Tsipras's call today for the Greek moratorium to be torn up, Asmussen insisted that the Greek government must abide by the terms agreed earlier this year if it wants to remain in the eurozone.

Asmusson has a similar message for France, following François Hollande's election victory. He warned that Paris must implement the fiscal compact as it stands, without changes. That echoes Angela Merkel's warning yesterday that the treary is not up for renegotiation.

Here's a nice picture from earlier today, showing Syriza coalition leader Alexis Tsipras leaving the presidential palace in Athens after being handed the mandate to form a government.

The FTSE 100 has now fallen below the level at which it started 2012. Currently down 92 points at 5563, with around 20 minutes to go until the close of trading.

The post-Greek election selloff is gathering pace in other markets too.

Michael Hewson of CMC Markets comments:

The Greek stock market closed at its lowest levels since 1992 after left wing party leader Alex Tsipras rejected the bailout deal as "null" raising concerns that the next move in the crisis could well be a path towards an exit from the euro. As a result the more cyclical sectors have borne the brunt of the declines with basic resource stocks the biggest losers on falling metal prices, with Vedanta Resources leading the way, while gold miners Randgold Resources and Fresnillo have slid as gold and silver prices slide.

The main Athens stock market has closed at its lowest level for almost 20 years this afternoon.

The Athens Stock Exchange General Index ended 3.6% lower at 620.5, a drop of 20 points. It hasn't closed at such a low level since December 1992.

Although it had rallied since January, the index has suffered a huge erosion of shareholder value since the financial crisis began. At the end of October 2007, in the early days of the credit crunch, the index was worth 5334 points. It's lost 89% of its value since.

Here's a round-up of reaction to the latest developments in Greece:

Robin Bew, chief economist of the Economist Intelligence Unit:

Going to interesting to see Hollande & #France reaction to #Greek voters rejection of cuts. After all, they are paying into Greek bailout — Robin Bew (@RobinBew) May 8, 2012

Steve Collins, global head of dealing at London & Capital Asset Management:

Tsipras has really scared the horses, tho we must rememebr 65% voted for this.... — Steve Collins (@TradeDesk_Steve) May 8, 2012

FT Markets Editor Chris Adams:

The reason for today's Greek-led sell-off|? Investors are getting increasingly nervous, in wake of Tsipras' comments, about Greek EZ exit — Chris Adams (@ChrisAdamsMKTS) May 8, 2012

The escalating Greek crisis has hit global stock markets. The Dow Jones index has fallen by 106 points, or 0.8%, in early Wall Street trading.

In London, the FTSE 100 has now shed 52 points to 5602, a fall of close to 1%.

And the euro is also touching new lows for the day, currently trading at $1.2993 against the US dollar. The pound is close to a new three and a half year high against the euro, at €1.2411.

Many currency experts are predicting today that the euro will fall further, soon. Clem Chambers, chief executive of ADVFN.com commented:



Europe remains far from turning the tide of its fiscal and economic weaknesses. The troubled currency will continue to weaken and looks set to breach its five-year low against the GBP sooner, rather than later. The UK may have economic troubles but the Eurozone is far worse off.

Shares on the Athens stock markets are being routed, after Alexis Tsipras (who was handed the mandate to form the next Greek government today) insisted that Greece should not abide by the terms of its bailout (see 1.27pm onwards).

The main stock index in Athens has fallen by 5%, with the banking index down by over 10%.

Analysts at IHS Global Insight warned this afternoon that the prospects of a strong, stable Greek government look "more and more distant", adding:

Without political and social support for austerity and reforms, the already challenging adjustment programme agreed with the "troika" looks destined for failure. Although several polls show that a majority of Greeks wish to stay in the Eurozone, the surge in votes for parties decidedly against the reform programme suggests that a sizeable portion of the Greek electorate is not prepared to do what needs to be done in order to remain in the common currency area.

But can you blame them, in the face of a five-year recession, unemployment rising, and an ongoing slump in its manufacturing and industrial sectors?

Here's a breakdown of Alexis Tsipras's conditions for forming a new government with either of the two 'mainstream' Greek parties (via Ekathimerini

1) The immediate cancellation of all impending measures that will impoverish Greeks further, such as cuts to pensions and salaries.

2) The immediate cancellation of all impending measures that undermine fundamental workers' rights, such as the abolition of collective labor agreements.

3) The immediate abolition of a law granting MPs immunity from prosecution, reform of the electoral law and a general overhaul of the political system. According to Keep Talking Greece, that would include abolishing the 50-seat bonus for the party which wins the most seats.

4) An investigation into Greek banks, and the immediate publication of the audit performed on the Greek banking sector by BlackRock.

5) The setting up of an international auditing committee to investigate the causes of Greece's public deficit, with a moratorium on all debt servicing until the findings of the audit are published.

That adds up to a resounding rejection of Greece's current financial programme.

The Greek Democratic Left party (which won 19 seats in Sunday's election), has announced that it would support Alexis Tsipras's Syriza coalition in a new government.

Declaring his support for Syriza, Fotis Kouvelis said that he wants Greece to remain within the euro, but to reject the terms of its current rescue package (known as the memorandum).

As explained here, Tsipras needs the support of several more parties to form a government.

After declaring that Greece's bailout pledges are now void, Alexis Tsipras went on to call for an international commission to rule on whether Greece's debt is legal.

The Syriza leader also lived up to his left-wing credentials by saying that he wants Greece's banks to come under state control.

A Syriza official has also been elaborating on Tsipras's comments. His position is clear -- Pasok and New Democracy must renege on the bailout pledges made to Troika in order to form a coalition government.

Greece's future in the euro is looking more and more precarious. Tsipras is not calling for an exit from the single currency, but the Troika which provided its €130bn will not welcome calls for the terms to be renegotiated.

Alexis Tsipras has just declared that the pledges Greece made to receive its financial aid package is null and void, and called for a moratorium (temporary halt) on Greek debt repayments.

Speaking after being granted the mandate to form a government, the Syriza leader declared that Greece's commitments to the international community are no longer valid, now that a majority of Greek people have voted for parties which oppose the terms of the bailout.

Here's the key quote, via Reuters.

The popular verdict clearly renders the bailout deal null.

The 37-year old politician (mini-profile here) said Antonis Samaras and Evangelos Venizelos (the leaders of the two mainstream parties), must write to Brussels saying that the commitments made earlier this year (austerity measures in return for the €130bn bailout) are no longer valid.

The speech has alarmed the financial markets, sending the euro falling through the $1.30 mark.

In another key development, the leader of the KKE Communist party has reportedly declined to meet Tsipras to discuss whether they could form a coalition government.

The electoral mathematics of the Greek election are fascinating (honest!).

Under the current PR system, whichever party receives the highest percentage of the vote gets an extra 50 seats (on top of the 250 seats up for grabs though voting %s).

That should make it much easier for a coalition to be formed. Not, though, if the front-runner party wins less than a fifth of the votes. New Democracy's 18.8% support give it 58 seats plus the 'bonus 50', while Syriza (16.77%) has 52 seats, followed by Pasok (13.18%) with 41 seats, the Independent Greeks (10.6%) with 33 seats, the Communist KKE party (8.48%) with 26 seats, the extremist Golden Dawn party (6.97%) 21 seats, and Democratic Left (6.1%) with 19 seats.

Alexis Tsipras needs at least 151 seats to form a coalition. So, he needs to make a deal with Pasok, KKE, and Independent Greeks (Democratic Left would be a bonus, but isn't crucial to the maths).

Alternatively, Syriza could form an alliance with New Democracy (which failed to form an administration yesterday).

UPDATE: It's not entirely clear whether Syriza could get the 50-seat bonus for winning an election (as I initially wrote). Under Greek law, a coalition's percentage of the vote is divided by the number of parties in the coalition. But a coalition can change its status to a party....

Turnout at the May 6 general elections was at an all-time low, official figures published by the Interior Ministry have shown. At 65%, more people declined to vote than voted for the leading party. That means there would be a lot of uncast votes up for grabs in a second ballot.

Incidentally, Twitter user @Finisterre67 gets in touch to quash any suggestion of improprieties in Sunday's election, in response to meljomur's query this morning.

@graemewearden To meljomur: was in Athens ballot-counting committee on Sun.+saw all was done by the book, i.e. ALL party votes were counted. — Finisterre67 (@Finisterre67) May 8, 2012

Latest from Greece: Alexis Tsipras has met with President Karolos Papoulias at the Presidential palace in Athens, and received the mandate to form a government.

Tsipras told Papoulias that:

This is a historical moment for the left and a big responsibility for me.

Now the clock is ticking – Tsipras has three days to reach a deal with other parties (as explained at 10.51am). The plan remains to meet with the KKE communist party first.

Italy has also seen a backlash against austerity and established political parties at the ballot box.

A party set up by Italian comedian Beppe Grillo performed well in regional elections last weekend -- Grillo is now planning to field candidates in the next Italian general election.

From Italy, Tom Kington reports:

The tousle-haired comic campaigns on green issues, fights corruption and has recently criticised Mario Monti's unpopular tax hikes, as well as claiming Italy should drop out of the euro. His party took 14% of the vote in Genoa, 9% in Verona and 19% in Parma, where it forced the mainstream Democratic party into a runoff. In all those towns, Grillo's mayoral candidates trounced Silvio Berlusconi's Freedom People party, which suffered humiliating defeats in its first electoral contest since the former president stepped down to make way in November for Monti's technocrat government, which did not stand in the elections.

Out in Brussels, the European establishment is signalling that it has not given up on Athens following last weekend's election results.

EC president José Manuel Barroso told reporters that the EU "remains committed to Greece", while commissioner Olli Rehn said Europe's twin goals were 'stability and growth'....

...Both of which are in short supply right now.

Rehn was less accomodating Spain, saying it must meet its fiscal obligations. Only by tackling its fiscal challenges can it restore confidence, he argued.

More as/if we get it.

Herman Van Rompuy, president of the European Council, has just announced that he will host an informal dinner of Heads of State or Government on Wednesday, 23 May, to discuss how European growth.

Will Greece be able to send its new prime minister?

A quick update from Helena Smith on how Syriza will use its three-day window for negotiations.

Syriza's press office has just confirmed that Alexis Tsipras will hold talks with various leftists parties and labour groups tromorrow before meeting the leaders of Greece's two mainstream parties, Pasok and New Democracy and the head of the breakaway conservative, stridently anti-austerity Independent Greeks party on Thursday.

As explained at 10.51am, Tsipras will begin by holding talks with the KKE communist party this afternoon (if they can lay aside their Marxist-Leninist doctrinal issues....)

Germany's industrial heartland continues to ride out the crisis.

Data just released showed that German industrial production jumped by 2.8% in March, beating economist forecasts of a 0.8% rise.

The German economy ministry also reported that industial activity was gaining pace (there was also a bounceback from February, when output fell by 0.3%). It added that "the outlook for industry has improved significantly".

Looking for reaction now

Our correspondent Helena Smith has the latest on the mood in Athens, ahead of Greece's leftist leader being given a mandate to form a government.



Helena reports that there is mounting anticipation this morning over the possibility that a government led by forces on the left could being formed, although the hurdles are formidable.

Alexis Tsipras, who head Syriza the suprise winner in Sunday's election, is expected to be given a mandate to try and create a government at 2 PM local time by president Carolos Papoulias, the country's head of state.



Syriza, Tripras's coalition of ex European communists, Maoists, Trotskyists, socialists and greens can scarcely believe its luck. This is the first time that leftist forces, unilaterally, have been given the chance to enter the corridors of power. Tsipras is expected to reach out to all parties starting with the virulently anti-European hardline KKE communist party whose symbol remains the hammer and sickle. The two parties, in a dispute that started with the rise of former Soviet leader Mikhail Gorbachev (Glastnost and Gorbachev's perceived rejection of Marxist-Leninist doctrine) have been at daggers drawn for decades. Senior cadres say unlike the conservative leader Antonis Samaras, who made use of the mandate in a record four hours "as if he wanted to get it out of the way," Tsipras will use all three of the days at his disposal to try and rally forces. "On paper it might not look as if we can't do it, as if the numbers don't add up but we will approach all the parties [with the exception fo the ultra-nationalist Chrysi Avgi] to see if they would be willing to endorse such a government." This morning senior Syriza officials were at pains to say that the party's objective was not " a euro exit for Greece" but renegotiating new terms on which it could continue to receive the rescue funds now keeping the debt-stricken economy afloat. Syriza MPs contend that the ultimatum "bailout or bankruptcy" has been overblown and is little more than a scare-tactic used by the mainstream parties to whip up support for the "barbaric measures" outlined in the deeply unpopular fiscal adjustment program that it entails. "The loan agreement has been rejected. That was the message of the election," Panaghiotis Lafazanis, a senior Syriza MP told a radio show. "We are fighting for change through change [in the policies] of Europe."

The euro has been weakening this morning, and is now down over half a cent to $1.3010.

The single currency remains very vulnerable to the political uncertainty across Europe. Jane Foley of Rabobank explained that Greece, France and Spain are all alarming traders, who could send the euro loer



News that public money will be used to bail out Bankia is the latest test for the Spanish government. It is hoped that the injection of funds will help clarify Bankia's position. The risk, however, is that investors will see this as a signal that more bad news will follow from Spain's banking sector. Against this backdrop we expect the EUR to remain on the back foot for now and retain our forecast that dips towards EUR/USD1.28 are likely.

My colleague Giles Tremlett wrote here about the latest developments in the Spanish banking sector. It appears likely that Bankia, the country's third largest bank, needs billions of euros in fresh capital.

European Commission president José Manuel Barroso and Commissioner for economic affairs Olli Rehn are due to hold a press conference in around half an hour, reports Peter Spiegel, the FT's man in Brussels.

#EU Commission Pres #Barroso and econ chief #Rehn to hold presser at 12:15pm local time. Clear your afternoon. #eurocrisis — Peter Spiegel (@SpiegelPeter) May 8, 2012

Open Europe, the think tank, predicts that Greece could be embarking on a series of elections. Its reading of Sunday's results is that a stable coalition government may not be possible, even after one more trip to the ballot box.



Open Europe writes:

Given the showing in the elections it is hard to imagine New Democracy, or any party, gaining a clear majority. Given the strength of the anti-austerity feeling in Greece it is unlikely that these results would be a one-off. The anti-austerity parties only look likely to gain ground in subsequent elections, making a stable coalition less likely. This analysis suggests that a cycle of elections looks increasingly probable in Greece.

If you missed the Greek election results, here's how the seats fell:

New Democracy – (18.86%) 108 seats

SYRIZA – (16.77%) 52 seats

Pasok – (13.18%) 41 seats

Independent Greeks – (10.6%) 33 seats

KKE (Communist party) – (8.48%) 26 seats

Golden Dawn (far-right) – (6.97%) 21 seats

Democratic Left – (6.1%) 19 seats

Greece's borrowing costs have risen, slightly, at an auction of short-term debt.

The Athens debt management agency found buyers for €1.3bn of six-month bonds (repayable in November), at an average yield of 4.69%. That's up from the previous auction of this type, when buyers demanded a 4.55% yield.

But in the current climate, we should probably be relieved that the auction was a success. It will allow Greece to 'rollover' debt sold at an earlier auction which matures on Friday.

The man who represented Greece's creditors through its recent torturous bond swap negotiations has warned this morning that Europe must break its focus on austerity.

Charles Dallara of the Institute for International Finance added his weight to the growing calls for a change of direction. Dallara told CNBC's "Squawk Box Europe" that:

We've seen the European economy within the political framework has disconnected. The overall focus on short-term budget cuts has to be adapted with economic reality. If we can get private investors' confidence rebuilt, we can change the situation around in Greece. The focus has been too heavily placed in short-term budget cuts and this has created the feeling that the situation seems bottomless.

Dallara predicted that Germany will eventually have to "re-evaluate the current economic strategy" and allow weaker members of the eurozone more time to rebuild their finances.

More details here.

Perhaps Greece's creditors are getting nervous that the new bonds they accepted via the debt swap might fail. Two in three votes cast in last weekend's election went to parties which oppose the bailout deal, in a sign that many Greek people will not accept the price of its financial aid deal.

Officially, Dallara remained positive over the political situation in Greece, saying:

when the dust settles we will have a government that comes together that has little choice but to preserve in many aspects the economic reform program.

So, who is Alexis Tsipras, the man who will attempt to form a new Greek government today?

Well, he was born just a few days after the fall of the Greek military dictatorship in 1974. Today, the 37-year-old is the youngest leader of a Greek political party.

He was an active youth politician, and was involved in a famous protest organised by school students against education minister Vasilis Kontogiannopoulos.

Tsipras first joined the Greek Communist Youth, and later became part of the Coalition of the Radical Left which he now leads. He studied civil engineering at the National Technical University of Athens (NTUS).

Unlike certain well-groomed rivals, Tsipras dresses down and is often driving around Athens on a motorcycle.

Descriptions of Tsipras vary, from "young and charismatic" to "brash and self-assured". Some observers question whether he has the experience to play a leading role in Greek politics, others argue that he represents much-needed political change.

Oops, missed this in the early agenda. Greece is aiming to auction €1bn of bonds this morning, in the form of six-month treasury bills. Previously, such short-term debt has proved quite popular with bond traders, but that might not be the case in the current crisis. Gary Jenkins of Swordfish Research reckons the sale "could be interesting"....

Greek daily newspaper Kathimerini warns today that Greece is rapidly approaching another crisis point, after New Democracy admitted last night it could not form a government.

In an editorial, the paper writes:

The country is heading at high speed towards catastrophe. If a national salvation government is not formed in the coming days, new elections will become inevitable.

Yet, last night, Syriza leader Alexis Tsipras indicated that a national salvation government could not be formed, as the differences between the various parties who won seats in last weekend's elections are too wide. Tsipras said:

"There can be no 'government of national salvation' as [Samaras] has called it because his signatures and commitments to the loan agreement do not constitute salvation but a tragedy for the people and the country.

European stock markets are a mixed bag in early trading. Some up, some down, but no sign of panic. Here's a round-up:

French CAC: - 41 points, or -1.29%, at 3172

German DAX: - 20 points, or -0.3%, at 6548

Spanish IBEX: + 13 points, or + 0.2%, at 70674

FTSE 100: - 6 points, or -0.1%, at 5648

In London, traders have returned to their desks after Monday's May Day bank holiday (yes, we know 1 May was last Tuesday. Put it down to British eccentricity). As city veteran David Buik commented:

We expect a ponderous start with volatility and nervousness being generated from Greece's very unhealthy political and economic outlook.

New Greek elections could come as early as 17 June, the Financial Times reckons, if a coalition cannot be agreed in the next few days.

In the reader comments, meljomur asks:

How easy is it to vote in Greece? Does the system make it "challenging" for those who are more likely to vote for the fringe parties?

Those of you in Greece (are you there, Kizbot?) will have a better idea than me about the intricacies of Greek elections. The election results suggest that 'fringe parties' overcame any such hurdles (such as the 3% threshold to win seats in parliament) , with Pasok and New Democracy taking such a pasting at the polls.

UPDATE: There's a great summary of Greek election law here on Radiobubble.gr (with thanks to the fantastic Theodora Oikonomides, who blogs and tweets as @irategreek).

Alexis Tsipras, the leader of Syriza, holds Greece's political future in his hands today after landing second place in last weekend's eelction.

The Radical Coalition of the Left, as Syriza is also known, ran on a policy of opposing Greece's current aid plan. Tsipras has vowed to freeze payments to creditors and renegotiate part of the €130bn package that was finally agreed in March.

Tsipras and Antonis Samaras may have been all smiles as they met yesterday, but the two men failed to find common ground (not surprisingly, as Samaras's New Democracy party supports the aid deal).

As Helena Smith wrote, Samaras took to national TV last night to admit that the talks had failed:

Attempts to form a new government in Athens have collapsed after the leader of the centre-right New Democracy party announced that he was unable to form a coalition in the crisis-hit country. "We did whatever was possible," Antonis Samaras told Greeks in a national address, saying he had reached out to every party with the exception of the far-right Chrysi Avgi (Golden Dawn), which was catapulted into parliament in Sunday's election.

If you missed Monday's action (it was a bank holiday in the UK), then you can catch up with all the action in our live blog from yesterday, anchored by my colleague Julia Kollewe. It was an exciting day - continental stock markets fell sharply at the start of trading, before recovering later in the day as traders and analysts digested the implications of the elections in France and Greece.

Today's eurozone news agenda will be dominated by the negotiations in Athens. Syriza, also known as the Coalition of the Radical Left, will sit down at the negotiating table and try to persuade other parties to join it in government.

Otherwise, it's a quiet data on the economic front - apart from a survey of German industrial production that will show how Europe's largest economy performed in March. A few bond auctions are also taking place, which will let us gauge the mood in the financial markets

• Greek coalition talks: ongoing : from noon BST

• German industrial production for March: 11am BST / noon CEST

• Austria (€1.21bn), the Netherlands (€2bn-€3bn)+ Belgium bond auctions: morning

• Greek bond auction: €1bn of 26-week bonds - 10am BST

Good morning, and welcome back to our rolling coverage of the eurozone debt crisis.

Today, the threat of new elections in Greece looms over the eurozone, as political parties struggle to form a new government. Syriza, the left-wing party, will hold talks with rivals today, after New Democracy admitted it could not build a coalition.

If a deal can't be reached, a second election would be inevitable.

The deadlock in Athens comes as speculation swirls of a multi-billion euro bank bailout in Spain.

While in France, François Hollande will be working on his new government - as Europe watches to see how the new French president puts his opposition to the fiscal treaty into action.

We're expecting a calmer day in the financial markets after yesterday's gyrations, but that could change as the situation in Greece becomes clearer.