Greek borrowing rates jump on coalition fears

ATHENS, Greece Greece's shaky coalition government was reeling Friday after one of its junior partners rejected a crucial compromise deal on the future of the state broadcaster and concerns over the country's bailout intensified.

The heightened uncertainty sent the country's borrowing costs to their highest level this year. The interest yield on the country's benchmark 10-year bond -- an indicator of investor confidence in a country -- spiked 0.80 percentage point Friday to 11.35 percent -- the highest in 2013. Meanwhile, shares on the Athens Stock Exchange were down nearly 3 percent midday Friday.

The latest pressure on the country comes after one of the junior partners in the coalition, the Democratic Left, rejected a compromise deal over last week's surprise decision by conservative Prime Minister Antonis Samaras to close public broadcaster ERT. The other junior partner, socialist Pasok, accepted the deal.

The parties have been trying to cobble together a deal on the broadcaster after the high court ruled the decision to close it unlawful.

If the Democratic Left were to quit the coalition, the conservatives and Pasok would be able to govern together, but the majority would be small.

Lawmakers from the Democratic Left were holding an emergency meeting Friday to decide on what future, if any, they had in the government. The party had boosted the government's reputation as an alternative to the left-wing opposition and being untainted by past mismanagement of public finances.

Greece has been relying on 240 billion euros ($316.8 billion) in bailout loans from the other euro countries and the International Monetary Fund for the past three years. The country has had to introduce harsh austerity measures demanded by rescue creditors, which have deepened the country's recession.

Samaras' ordered ERT's closure on June 11, shutting off its signal and firing nearly 2,700 employees as the country embarks on a second stage of painful cuts likely to focus on reducing the size of the public sector.

Debt inspectors have suspended a review of Greece's public finances amid the political crisis, while the IMF warned Thursday that loan payouts could be affected if that review does not restart soon.

If Greece falls further into political crisis, this could lead to it missing some of its agreed targets, which could force the creditors to withhold paying out the next tranche of bailout cash.

"I love Greece but I'm very much looking forward to a Eurogroup press conference where Greece is not going to be discussed and a summer where we don't have any Greek crisis," said the EU's top economic official, Olli Rehn said Thursday night at the closing of a meeting of euro finance ministers.

"I want to appeal to the sense of responsibility of political leaders in Greece," he added.

Rehn stressed Greece has to push ahead with "the technical work on the fiscal policies and the structural reforms."