Leader of the New Democracy conservative party Antonis Samaras (L) meets Democratic Left party leader, Fotis Kouvelis at his office in the Greek parliament in Athens

REUTERS

Greek political parties meeting on Tuesday said they expected to form a coalition government soon and then seek concessions to the painful austerity measures tied to the international bailout deal keeping the country from bankruptcy.

Conservative New Democracy leader Antonis Samaras, the winner of Sunday's election, has promised to negotiate easier terms for Greece, backed by likely coalition partner Evangelos Venizelos, head of the Socialist PASOK party.

"Greece must and will have a government as soon as possible," Venizelos said after a meeting with Fotis Kouvelis, head of the small Democratic Left party as part of talks to form a cross-party government with New Democracy.

"There is a need to form a national negotiating team that will deal with revision of harsh terms of the bailout deal."

However, hopes that the government may be in place by the end of the day appeared to fade after Kouvelis, whose party opposed the bailout deal in the election campaign, said several points still needed to be negotiated and agreement might take longer, reports Reuters.

"There will be a government, but I don't know if it will be formed by tonight. I believe we will have reached an agreement by the end of the week," he told reporters.

Earlier, a senior New Democracy official said he expected that a deal with PASOK would be reached by Tuesday. Samaras, who has three days to form a coalition before his mandate runs out, is due to hold further meetings during the day.

New Democracy and PASOK alternated in power from the fall of military rule in 1974 until last year, when Greece's economic crisis forced the arch rivals to share power in a pro-bailout national unity government.

But PASOK support has plunged this year, leaving it a distant third behind New Democracy and the leftist SYRIZA party, which wants to cancel the austerity measures in the bailout package and negotiate a new "national recovery plan".

There has been a marked shift of tone since the election as leaders of the parties that had previously broadly supported the bailout have talked openly about easing the tough conditions demanded by the European Union and International Monetary Fund.

European partners, notably from the bloc's biggest economy Germany, have held out the prospect of extending some payment deadlines but they have repeatedly insisted that the basic conditions of the deal cannot be renegotiated.

"The new government must stick to its commitments, which the country has agreed on," German Chancellor Angela Merkel said at a meeting of leaders from the Group of 20 major economic powers.

A senior euro zone official, speaking on condition of anonymity, said the terms of the deal were "changeable" and could be "adapted", but there were different opinions in the euro area and in Greece on the scope of such changes.

In a sign that Greeks themselves have taken some confidence from the election, banks reported that some deposits withdrawn in the run-up to the vote appeared to be trickling back.

"We didn't have any deposit outflows yesterday, and we are expecting a similar picture today," said one banker, speaking on condition of anonymity. "The election result helped. On the contrary, we had small inflows of up to 10,000 euros from people who kept cash at home."