Papandreou calls emergency Greek cabinet meeting (by MarketWatch)

FRANKFURT (MarketWatch) -- Greek Prime Minister George Papandreou has called an emergency cabinet meeting for later Tuesday afternoon in an effort to contain a revolt in his ruling PASOK party, Dow Jones Newswires reported. Six senior officials of Papandreou's party called for his replacement earlier in the day. Milena Apostolaki, a parliamentary deputy, left the party's parliamentary group on Tuesday, shrinking Papandreou's majority to just two seats. Another PASOK deputy, Eva Kaili, called for a national unity government, but said it shouldn't be headed by Papandreou, the report said. The moves come after Papandreou on Monday announced the latest euro-zone rescue plan for Greece will be put to a referendum, expected in January. Papandreou also faces a parliametnary confidence vote later this week.

Greek referendum 'roll of the dice:' Zoellick (by Greg Robb)

WASHINGTON (MarketWatch) - The call for a referendum by Greek Prime Minister George Papandreou on the latest bailout deal agreed with the European Union looks like a roll of the dice that could end in a "mess," said World Bank President Robert Zoellick on Tuesday. "It is a roll of the dice. If it passes, it could be a positive signal for the people and if it fails, it is going to be a mess," Zoellick said in a conference call with reporters. Zoellick said he was not trying to second guess the Greek political authorities. "Ultimately countries have to make their own decisions here. They need the political support and they have to take the tough actions," he said. But plans for a referendum only add uncertainty to financial markets and "makes the hill steeper" for the G-20.

Germany's Merkel, France's Sarkozy to meet Wed. (by William L. Watts)

FRANKFURT (MarketWatch) -- German Chancellor Angela Merkel and French President Nicolas Sarkozy spoke by phone Tuesday as Greece's plan to hold a referendum on its latest bailout package stirred global market turmoil, Merkel's office said in a statement. Merkel and Sarkozy plan to meet Wednesday in Cannes ahead of the Group of 20 summit meeting set to take place there and will hold discussions with European institutions, the International Monetary Fund and Greek officials, the statement said. Merkel and Sarkozy both expect the debt plan agreed to by European leaders last week to allow Greece to return to sustained growth, the statement said.

Banks to move ahead with Greek debt deal: IIF (by William L. Watts)

FRANKFURT (MarketWatch) -- The Institute of International Finance, a Washington-based group that represents the world's largest banks, on Tuesday said it intends to move ahead with the agreement reached with euro-zone leaders last week to accept a 50% cut in the value of Greek government bonds. The statement comes after an announcement by Greek Prime Minister George Papandreou to hold a referendum on the debt plan triggered a round of global market turmoil. "We will work closely with the Greek authorities, euro area officials and other relevant parties to agree on, finalize and move toward implementation of the details [of the plan] in support of Greece's reform effort to recover from the current crisis, restore market access and lay the basis for renewed growth," the IIF said.

Europe must implement deal rapidly: White House (by Greg Robb)

WASHINGTON (MarketWatch) - The proposed Greek referendum reinforces the need for Europe to "elaborate further and implement rapidly" the European bailout plan reached last week, White House spokesman Jay Carney said Tuesday. The White House repeated that Europe has the capacity to solve the crisis. "We will continue to work with them as they do," Carney said.

EU and EC say euro deal best solution for Greece (by Christopher Noble)

SAN FRANCISCO (MarketWatch) -- The deal agreed last week by euro-zone members to help solve Greece's sovereign debt problems and prevent them from spreading to other nations in the currency bloc are the best way to handle the country's crisis, the European Commission and the European Council said in a joint statement on Tuesday. "We take note of the intention of the Greek authorities to hold a referendum. We are convinced that this agreement is the best for Greece. We fully trust that Greece will honour the commitments undertaken in relation to the euro area and the international community," European Council President Herman Van Rompuy and European Commission President Manuel Barroso said in a joint statement. The two leaders spoke by telephone with the Greek prime minister on Tuesday and are in contact with members of the euro zone, the statement said. The two issued the statement the day after Greek Prime Minister George Papandreou said he would hold a referendum on whether Greece should accept the deal. His decision sparked anger and confusion among euro-zone members and caused financial markets to fall around the world.

France, Germany want euro deal on Greece enacted (by Christopher Noble)

SAN FRANCISCO -- France and Germany on Tuesday said they were determined to see last week's agreement on Greece's debt problems enacted as quickly as possible. "France and Germany are determined to ensure, with their European partners, the complete implementation, as quickly as possible, of the decisions adopted by the summit, which are today more necessary than ever," a statement by French President Nicolas Sarkozy and German Chancellor Angela Merkel said. The statement, on the French presidency's website, said the two countries were convinced that the deal agreed by the euro zone's members would allow Greece to return to lasting economic growth. The statement also said Sarkozy, Merkel, the heads of European institutions, the head of the International Monetary Fund and Greek authorities would meet on Wednesday to take whatever steps were necessary to enact last week's deal.