Greece holds key elections

Polling stations have opened in Greece where voters face a stark dilemma between rejecting austerity and risking the country's place in the eurozone, or choosing to stay in the single currency bloc despite the punishing terms of an international bailout package.

The main contenders, the right-wing New Democracy and left-wing Syriza, are at odds over whether broadly to stick with the tough EU bailout deal, or reject it and boost social spending.

Opinion polls are banned for two weeks before voting but unofficial polls say the result is too close to call.

Riding a wave of anger to rise from obscurity to contender for power, leftist Syriza party leader Alexis Tsipras, 37, has promised to reject the 130 billion-euro bailout if he wins the vote on Sunday.

"The bailout deal is already in the past. It will be history for good on Monday," Tsipras said earlier this week.

He has given himself a 10-day deadline for negotiations - in time for a summit of European leaders on June 28 and 29.

Tsipras says the mood in Europe is shifting against austerity and that the European Union and International Monetary Fund will not want to risk a Greek euro exit that would send shockwaves through the global economy.

On the political right, New Democracy leader Antonis Samaras, says a vote for the left would send Greece crashing out of the single currency and condemn it to even greater economic calamity.

With the election set to go down to the wire, European leaders also weighed in on Saturday, urging Greeks to vote with their heads.

EU leaders say if Greece rejects the bailout, it may have to leave the euro.

The poll, the second in six weeks, was called after a vote on 6 May proved inconclusive.

Sunday's vote is being watched around the world, amid fears that a Greek exit from the euro could spread contagion to other eurozone members and send turmoil throughout the global economy.

Tough austerity measures were attached to the two international bailouts awarded to Greece, an initial package worth 110 billion euros in 2010, then a follow-up last year worth 130 billion euros.

The bailout would not be renegotiated, warned Angela Merkel, Germany's chancellor, whose country's wealth is vital to shoring up its weaker partners in the bloc.

"That's why it's so important that the Greek elections preferably lead to a result in which those that will form a future government say: 'yes, we will stick to the agreements'," Merkel told a party conference of her Christian Democrats.

Jean-Claude Juncker, the head of the group of eurozone finance ministers and prime minister of Luxembourg, said there would be serious consequences if Syriza secured victory.

"If the radical left wins - which cannot be ruled out - the consequences for the currency union are unforeseeable," Juncker told Austrian newspaper Kurier.

European leaders have warned that Greece must respect its international debt commitments, and the EU and the IMF have suspended payment of installments of the country's rescue loan until after the elections.

No one party is expected to win enough votes to secure a majority in parliament, and the days to come are likely to be dominated by coalition talks, while a euro exit is a real but extreme and certainly not immediate possibility.