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Greece Agrees on Lucas Papademos, Former ECB VP as PM

November 10, 2011

Greece has named a former top official of the European Central Bank as interim prime minister after days of intense talks about a coalition government the country hopes will help it get out of a deep financial crisis.

Lucas Papademos, the former vice president of the ECB, will head an interim "unity" government that hopes to implement a new European bailout plan and ensure that Greece receives the next installment of its existing international bailout loans to avoid a debt default.

Major European stock exchanges reported gains Thursday on hopes that Greece and Italy were nearing breakthroughs in plans for new governments to help lead them out of the debt crisis.

Italian Prime Minister Silvio Berlusconi, who has promised to step down after parliament passes tough austerity measures, appeared Thursday to endorse the man widely seen as his replacement, leading economist Mario Monti.

A former European Union commissioner, Monti is expected to head a new government that hopes to reduce Italy's $2.6 trillion debt.

Eurozone leaders have urged both countries to hasten with unpopular economic reforms aimed at saving them from bankruptcy, which would further destabilize the euro and fuel turmoil in the already unstable global financial markets.

Stocks had dropped Wednesday and opened in negative territory across the globe Thursday following news that Italy's main borrowing rate soared past 7 percent - higher than the rate that forced Greece, Ireland and Portugal to ask for bailout loans.

Italy is the eurozone's third largest economy and a bailout to prevent a default on its massive debt - nearly 120 percent of its GDP - would be too expensive for the 17-nation common currency bloc to bear.

The EU on Thursday warned that the 17-country eurozone could slip into another recession next year. The EU says the eurozone will grow by only 0.5 percent in 2012, down from its earlier prediction of 1.8 percent.

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