A string of parliamentary resignations on Thursday threatened to thwart Greek Prime Minister George Papandreou's plan to reshuffle his cabinet and pass austerity measures needed to save the nation from default.
The political turmoil raised uncertainty over the Socialist cabinet's five-year plan for tax hikes, spending cuts and state property selloffs demanded by its bailout lenders, spooking investors who fear the problems will infect global markets.
Analysts said it was increasingly unclear whether Papandreou would be able to form a new governing team and get the deeply unpopular measures approved amid the political chaos, which follows nationwide strikes and violent protests in Athens on Wednesday.
"It will be very hard now to find good people to form a government now. They don't trust (Papandreou) after all the flip-flops he has made," said former finance minister Stefanos Manos. "Who will make privatizations now in all this turmoil?"
Ruling party lawmakers will hold a caucus meeting of the parliamentary group on Thursday evening to debate the government's policies.
"We are not governing the country the way we should... We are going from depth to depth, from dilemma to dilemma," ruling party deputy Nikos Salayannis said outside parliament.
Two other Socialist deputies stepped down on Thursday in protest and will be replaced by other party members.
World stocks hit a three-month low, the euro tumbled and government bonds with top credit ratings rose as concerns intensified over the crisis, while the cost of insuring Greek debt against default hit yet another record high.
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