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Greek government set for first talks with eurozone partners

Greece's new anti-austerity government is set to hold its first talks on Friday with its eurozone partners about its ambitions to secure a reduction in the massive debts linked to its 240-billion-euro (S$364 billion) international bailout.

[ATHENS] Greece's new anti-austerity government is set to hold its first talks on Friday with its eurozone partners about its ambitions to secure a reduction in the massive debts linked to its 240-billion-euro (S$364 billion) international bailout.

But the talks come hot on the heels of a warning by the European Union and Germany that there is little support for reducing the debts, which the radical new government is hoping to cut in half.

Prime Minister Alexis Tsipras is set to 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 on Thursday after plunging the day before on concerns about the dramatic first moves of Tsipras's radical new administration.

European Parliament chief Martin Schulz on Thursday became the first foreign dignitary to meet Tsipras' government, and said the prime minister had assured him that Greece would seek "common ground" with its EU peers.

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

Elected on Sunday, the new government has already begun to roll back years of austerity measures demanded by the EU and the International Monetary Fund in return for the huge 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 bailout.

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

Greece said negotiations would start in earnest with Dijsselbloem's visit on Friday, with the finance ministry saying it hoped talks could lead to "a viable, comprehensive agreement to rebuild our social economy".

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 ramp up 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 per cent on Thursday after plunging by more than a quarter a day before.

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 per cent 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.

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

Tsipras' Syriza party has been seen as pro-Russian, with Moscow's ambassador becoming the first foreign official to be received by the prime minister after his election victory. Many of the party's members 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.