Greece braces for demos and austerity vote

Greek protesters poured out in their thousands for a second day as parliament prepared to vote on a critical austerity bill aimed at averting a debt default.

The streets around parliament resembled a battle zone on Wednesday with clashes between masked protesters and riot police leaving at least 45 people injured and seeing widespread vandalism on stores, banks and hotels in central Athens.

In the largest demonstration since the start of Greece\'s debt crisis, some 70,000 people according to the authorities and 200,000 according to unions poured into the streets in Athens alone to protest the government\'s economic policies.

On Thursday, demonstrators were planning to encircle parliament where lawmakers were to hold the final vote on the bill that introduces collective wage amendments, major tax break cuts, a new civil service salary system and temporary layoffs for thousands of public sector staff.

Although Greece\'s austerity bill passed a first, largely procedural reading late on Wednesday, a number of government deputies have threatened to reject an article on wage amendments in Thursday\'s follow-up vote.

Finance Minister Evangelos Venizelos told parliament on Wednesday that Greece faced a "battle of battles" in Brussels and would be unable to finalise its budget without Thursday\'s new measures.

The government has repeatedly warned that failure to pass the legislation ahead of the EU summit would prompt Greece\'s peers to block the release of loans and cause a payments freeze.

A leading government official on Thursday urged EU policymakers to come to a "conclusive" solution at an upcoming summit this weekend on the sovereign debt crisis whose epicentre is Greece.

"I call on the Europeans to see what happened yesterday because this cannot go on. Public anger will expand everywhere. They must stop fooling around ... conclusive solutions are needed," the ruling party\'s chief whip Christos Protopappas told Flash Radio.

"The crisis has already hit Portugal and Italy, it will spread to France and Belgium next," Protopappas added.

European Commission President Jose Manuel Barroso urged Europe\'s leaders to show compromise ahead of the summit and said it was vital to agree to strengthen the European Financial Stability Facility (EFSF), the bloc\'s primary weapon to stem the crisis.

Meanwhile eurozone\'s largest economy Germany was due to contribute to the grim economic outlook later on Thursday when it is expected to halve its growth forecast for next year when it releases updated economic indicators.

Having up to now weathered the economic storm better than its eurozone peers, Germany is expected to slash its forecast to 1.0 percent for 2012, from the 1.8 percent it had projected in April, according to government sources.

And ratings agencies kept up their bad-news torrent, with Moody\'s cutting its debt ratings of five Spanish banks and most of the countries regions and Standard and Poors downgrading the sovereign credit rating of Slovenia.

Amid the steady flow of downgrades, the European Commission is reportedly considering banning the ratings agencies from publishing assessments of EU countries in difficulties, the Financial Time Deutschland reported on Thursday.

France also received worrying news when the Zurich-based Bank of International Settlements said that French banks were the biggest lenders to Greece and Italy, with about half of Italian debt -- $416.37 billion -- owed to French lenders.

The data comes just days France received a warning from Moody\'s that it could lose its prized triple-A rating because the current economic crisis has significantly affected its fiscal health.

France vowed it would "take all measures" to keep the cherished rating.

At their summit in Brussels from Friday, EU leaders will discuss new ways to help out Athens at their summit and rubber-stamp the release of the next eight billion euros in loans.

They will also look to strengthen the (EFSF), which now has 440 billion euros but would need much more if it had to throw a lifeline to other strugglers such as Italy or Spain.

According to one diplomat, the leaders would discuss boosting the fund\'s capacity to between "one and two trillion euros."

Underlining the urgency of the crisis, French President Nicolas Sarkozy left his wife in labour at a Paris clinic late Wednesday to rush to Frankfurt for talks with German Chancellor Angela Merkel, missing the birth of the couple\'s first child and his first daughter after three sons.

The leaders of eurozone\'s top two economies have both vowed to save the euro, warning that its failure could destroy Europe.

"Allowing the destruction of the euro would be to take a risk of destroying Europe," said Sarkozy.

"If the euro fails, then Europe fails. We will not let that happen," said Merkel.

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