A top European Union official said on Friday there was no risk that Greece would default or leave the euro zone and the country's finance minister said he was not aware of any bailout talks. “No, Greece will not default. Please. In the euro area, the default does not exist because with a single currency the possibility to get funding in your own currency is much bigger,” Monetary Affairs Commissioner Joaquin Almunia told Bloomberg TV. “There is no bailout problems.” Greek Finance Minister George Papaconstantinou echoed those comments, saying he was not aware of any bailout talks with EU states including France and Germany, and said the government was focused on doing “whatever it takes to bring the deficit down.” Greece has pledged to reduce its budget deficit this year to 8.7 percent of gross domestic product through welfare cuts, tax reforms and savings on public sector wages. The euro zone member partially regained investor confidence on Monday when it succeeded in selling 8 billion euros of bonds and announced plans to sell more in February. Concerns over Greece's ability to rein in its spending have continued to haunt the markets, despite repeated assurances from Greek and EU officials, but Almunia's comments helped sooth debt markets. The cost of insuring Greek government debt against default fell to 397,000 euros per 10 million of exposure from a record high of 422,500 on Thursday, according to the five-year credit default swap prices from CMA DataVision. The premium investors demand to hold Greek government bonds over benchmark German Bunds also fell, with traders citing media reports saying the EU could bail out Greece. The Financial Times quoted what it said were high-level EU officials saying that Greece, whose budget deficit hit an estimated 12.7 percent of GDP this year, would in the last resort receive emergency support from other euro zone governments. The reports came despite denials from Germany and France of similar suggestions on Thursday and comments by the European Commission president revived speculation of an EU rescue. “From my point of view it is quite clear that economic policies are not just a matter of national concern but European concern,” Jose Manuel Barroso said in Brussels. Financial markets are gripped by the fear Athens will not be able to service its heavy debt, putting pressure on the euro and even prompting speculation that Greece could be forced out of the currency bloc.
