News WrapGet Handpicked Stories from our editors directly to your mailbox

EU, Germany warn Greece over debt reduction ambitions

The European Union and Germany warned Greece`s radical new left-wing government Thursday that there is little support for a reduction in its massive debts, on the eve of its first talks with its eurozone partners.

Radical Prime Minister Alexis Tsipras will on Friday meet Jeroen Dijsselbloem, the current head of the eurozone group of finance ministers, which Athens said would mark the start of Greece`s negotiations on revising the conditions of its bailout deal.

Ahead of the meeting, Greek bank stocks rebounded Thursday after plunging the day before on concerns about the dramatic first moves of Tsipras`s new administration.

European Parliament chief Martin Schulz on Thursday became the first foreign dignitary to meet Tsipras` anti-austerity government.

He said the prime minister had assured him that Greece would seek "common ground" with its EU peers.

Schulz said the prime minister had assured him that Athens would not seek a "unilateral solution" to the renegotiation of its multi-billion-euro bailout.

The new Greek government, elected on Sunday, has already begun to roll back years of austerity measures demanded by the EU and the International Monetary Fund in return for a 240-billion-euro ($269 billion) bailout granted to avoid a financial meltdown in 2010, and says it will negotiate to halve the debt.But European Commission chief Jean-Claude Juncker said a reduction of the 315-billion-euro debt linked to the bailout "is not on the radar".

"I don`t think there`s a majority in the Eurogroup... for a reduction of the debt," he told Germany`s ARD television, referring to the eurozone`s finance ministers.

Sigmar Gabriel, Germany`s vice-chancellor and also its economy minister, said he expected Greece to "stick to its commitments" for fiscal and economic reform made in exchange for the package.

He was critical of a decision by the new government to scrap the privatisation of major ports and power companies, decisions which also draw a rebuke from China.

EU parliamentary chief Schulz told a press conference with the 40-year-old Greek prime minister that "there are certain fears in Europe that Tsipras will follow his own path, but today I discovered that is not the case,.

He added that during his talks in Athens "I heard something very important... Greece has financing issues but you are not going to deal with them through unilateral acts, but through consultation with your peers."

Greece said negotiations would start in earnest with Dijsselbloem`s visit on Friday.

"Negotiations with our partners begin with this visit, which will lead to a viable, comprehensive agreement to rebuild our social economy," a finance ministry statement said.

Dijsselbloem, the Dutch finance minister, will meet Tsipras and his outspoken Finance Minister Yanis Varoufakis, a maverick economist who regularly shares his thoughts on his personal blog.

Varoufakis will increase Greece`s efforts to rally support for a renegotiation when he visits Britain, France and Italy next week.Greek bank stocks rebounded by nearly 13 percent after plunging by more than a quarter on Wednesday.

The Athens market had taken fright after the new government announced it was abandoning the privatisation of the major ports of Piraeus and Thessaloniki, main electricity provider PPC and petroleum refiner HELPE.

China, which already has a major investment in the Piraeus port, said it was "highly concerned" after Tsipras`s government abandoned plans to put the privatisation of the docks -- one of Europe`s busiest -- out to tender.

The Athens market closed 3.16 percent higher on Thursday, driven by the banks` partial recovery.

The Greek central bank said 4.0 billion euros in private deposits had been withdrawn from banks in December.

Daniele Nouy, head of the European Central Bank`s Supervisory Board, said despite the post-election turbulence, Greek lenders were "pretty strong".

Tsipras` government was also embroiled in its first foreign policy row after it complained to Brussels over allegedly not being consulted when the EU threatened new sanctions against Russia over the war in Ukraine.

Before his visit to Athens, Schulz said Greece had "abandoned" the EU position on Russia over the Ukraine conflict.

EU foreign ministers eventually overcame Greece`s reluctance and agreed to extend the sanctions against Russia.

Russia`s ambassador was the first foreign official received by Tsipras after his election victory on Sunday and many of his Syriza party have deep leftist roots.

Tsipras, who ousted the conservatives of former prime minister Antonis Samaras, has said Greece is no longer prepared to bow to the "politics of submission", in a clear swipe at its international creditors.

Finance Minister Varoufakis has said the government wants "a pan-European New Deal" to encourage growth and help the continent deal with Greece`s crisis.