Investors continued to shun Greek debt over mounting concern that the country will have to restructure its debt, which official European Union data showed on Tuesday had rocketed to 142.8 percent of gross domestic product in 2010.
The premium investors demand to hold Greek government bonds rather than benchmark German Bunds rose to a euro era high above 12 percentage points and the cost of insuring Greek debt against default rose sharply.
The Greek government said it would take all necessary measures to meet its fiscal targets under an EU/IMF bailout program after last year's public deficit was revised upwards to 10.5 percent of GDP.
Athens blamed the deviation from the original 8percent target, and the most recent forecast of 9.6 percent, on a deeper than anticipated recession which hit tax revenue and social security contributions.
"The fact that the Greek deficit ratio for 2010 is now also in double-digit territory should further fuel the debate about Greek sovereign debt restructuring," said Ralph Solveen, economist at Commerzbank.
The ECB under Trichet is fiercely opposed to any restructuring.
Despite official denials from Athens and Brussels, two Greek newspapers said on Friday that the government was considering extending maturities on its debt to make it sustainable.
Top-selling daily Ta Nea spoke of a "velvet restructuring" that would include extending outstanding debt and a voluntary agreement with lenders to modify the repayment terms.
Reuters
