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New Protests As Greek Parliament Approves Austerity Measures


Protesters face off against police near the parliament building in the center of Athens on May 5.

PRAGUE -- Fresh protests have broken out in the Greek capital of Athens as demonstrators angry about the government's approval of a harsh austerity package clashed with police.

Greek police fired tear gas at a group of about 150 protesters who rallied outside of parliament after lawmakers approved the package of deep wage cuts and tax increases.

Witnesses reported seeing demonstrators throwing bottles and rocks at a police cordon.

In New York, Wall Street reacted with panic to the violence, triggering a 600-point drop in U.S. stock markets.

The austerity package contains the major spending cuts demanded by the International Monetary Fund and European Union countries before Greece can access a 110-billion-euro (about $140 billion) loan package to save it from bankruptcy.

Lawmakers voted 172-121 to approve the cuts that will slash pensions and civil servants' pay and further hike consumer taxes.

Ahead of the vote, Prime Minister George Papandreou said the legislation was the only way to avoid bankruptcy. "Today things are very simple. Either we vote and pass this bill or we condemn Greece to bankruptcy," he said.

The bill passed without difficulty because of the government's big majority.

Police in Athens were braced for more possible trouble after the vote, as Greece's main labor unions called for fresh protests and thousands of demonstrators gathered outside the parliament building.

Immediately after the vote was taken, protesters began marching through the streets of Athens, banging drums and shouting anti-government slogans.Wednesday's rioting left three people dead in a fire-bombed Athens bank.

It also deepened concerns about the stability of the common currency the euro.

The European Central Bank (ECB) has played almost no role in the crisis so far. But it seemed set to take a more active role when it announced earlier this week that it would accept Greek bonds as collateral for loans to eurozone banks, even though the bonds have been downgraded to junk status.

However, ECB President Jean-Claude Trichet told journalists in Lisbon that today that a meeting of bank governors had not discussed repeating this action to help other economically-struggling eurozone member countries.

He said the problems of Portugal and Spain -- the next weakest members of the eurozone after Greece -- are not of the same order or magnitude as Greece's.

Trichet also said the bank had not discussed the idea of buying government bonds -- as urged by some experts -- as a way to support other debt-laden governments in the eurozone.

The monthly interest-setting meeting of governors decided to keep the key interbank eurozone interest rate at a record low one percent.

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