Athens: Greece is set for a snap election next month that could bring a radical anti-austerity party to power, after lawmakers failed for a third time on Monday to elect a new president.
The vote, which Prime Minister Antonis Samaras proposed for January 25, is likely to further rattle the economy and financial markets after Greece's dire finances nearly destroyed the eurozone in 2012.
Greek stocks lost more than seven per cent after the parliamentary vote -- having dropped a massive 11 per cent earlier in the day -- amid fears that the front-running far-left Syriza party could undo many of Greece's economic reforms if it wins the election.
The rate on 10-year Greek government bonds also jumped to 9.55 per cent from 8.5 per cent last week.
"With the will of our people, in a few days the bailout agreements of austerity will be history," Syriza's 40-year-old leader Alexis Tsipras told reporters after the vote.
"The future has already begun," he said.
Syriza, which declined to vote in the presidential election in order to force snap polls, wants to raise salaries and pensions, halt layoffs and freeze the privatisation of state assets -- key elements of reforms demanded by Greece's EU-IMF creditors.
The government's candidate, former EU Environment Commissioner Stavros Dimas, secured just 168 votes out of the 180 needed and under the constitution, parliament will have to be dissolved in the next 10 days.
Samaras said he would ask outgoing President Karolos Papoulias to hold elections on January 25.
"We are close to exiting the crisis. I am here to guarantee that the country reaches the haven of safety and stability," he said in a nationally televised address.
He said the ballot would be Greece's "most decisive in decades."
Hamburg-based analysts Berenberg said there was "a risk of around 30 percent that Greece may descend into a new deep crisis with potential euro exit beyond the inevitable bout of near-term uncertainty now".
"That is a significant risk," they added.
In recent days, European Commission President Jean-Claude Juncker and German Finance Minister Wolfgang Schaeuble have warned Greeks not to change course and abandon the reforms.
The European Union and the International Monetary Fund have overseen two massive international bailouts for Greece after its debt crisis nearly destroyed the 17-member single currency zone.
But even after the rescue packages worth 240 billion euros (USD 290 billion) and most of the debt held by private investors being wiped out, the economy has only just begun to recover after six years of contraction.
"The opposition today forced early elections at the worst possible time for the country's economy," conservative lawmaker Dora Bakoyannis said after the presidency vote.
Opinion polls show Samaras's ruling coalition trailing Syriza.