Athens: Fears that debt-stricken Greece may be headed for a chaotic Eurozone exit loomed large as President Barack Obama met other G8 leaders for crisis talks in the United States on Friday.
The Group of Eight top economies came together as Greece faces its second election in just six weeks, putting its Eurozone future in doubt and dragging down Spain, where the government is struggling to keep its banks afloat.
"Time is clearly running out," London-based analysts Capital Economics warned in a note over Greece's continued political paralysis.
"If the government does not meet the conditions required to receive the next tranche of the bailout, it could run out of money before the end of the summer," they said, referring to Greece's EU-IMF loan lifeline.
"It has become obvious that the period up to the Greek elections will be volatile and nervous," said the debt research wing of Dutch bank ING.
"Speculation regarding a [Greek] Eurozone exit will continue and there is hardly anything that can be done about it," they said.
Extreme volatility
European stock markets posted sharp losses, mirroring drops in Asia, though Madrid rose in an illustration of the extreme volatility at work.
Money flowed again into Germany, seen as the safest of bets against the risk of contagion from Greece, with investors worried that if Spain needs a bailout, the EU will be hard put to stump up enough rescue funding.
Ratings agency Moody's downgraded 16 Spanish banks late on Thursday, citing concerns over the crisis, while figures showed the economy slumped in recession and bank bad loans at an 18-year high.
Spain on Friday also revised its 2011 public deficit figure, saying that it stood at 8.9 per cent of gross domestic product instead of 8.51 per cent as reported earlier.
The revision came after the latest information was received from the country's autonomous regions, the budget ministry said in a statement.
