Sarkozy, Merkel to meet Greeks on Wednesday

By Emmanuel Jarry and John Irish

President Nicolas Sarkozy

Chancellor Angela Merkel

Markets tumbled across Europe in response to the announcement by the Greek government to hold a referendum on the agreement which is expected to take place in a few weeks.

Last week's 130 billion-euro ($180 billion) bailout package had raised hopes a line could be drawn under banks' Greek losses and euro zone bonds could be sold to China and other investors.

"France and Germany are determined to ensure, with their European partners, the full implementation in the quickest time frame, the decisions adopted at the (October 27) summit, which are today more important than ever," Sarkozy's office said in a statement following a telephone call between the two leaders on Tuesday to discuss Greek plans for a referendum on the package.

"France and Germany are convinced that this accord will enable Greece to restore lasting growth," the statement said. "In consultation with our European partners and the IMF, (we) would like a road map to be quickly agreed to ensure the implementation of this deal."

The statement made no mention of the Greek referendum.

Sarkozy is also due to meet his top ministers, including the prime minister, finance minister and foreign minister as well as the central bank governor, at 1700 local time (1600 GMT) to discuss the latest developments and Paris' plan of action.

No statement is due after the ministerial meeting.


Share prices of French banks and other lenders exposed to Greece and other weak euro zone countries slumped on Tuesday.

Societe Generale tumbled 13 percent and BNP Paribas and Credit Agricole fell more than 10 percent. They are among the most exposed to Greece through sovereign debt holdings and loans.

"We have just added fuel to the fire and we don't understand at all the decision of the Greek PM," said Marc Touati, chief economist at Assya Compagnie Financiere in Paris.

"If there is a referendum the 'no' will win. Greece is playing a suicidal game that could lead to its exit of the euro zone so there is fear on French banks, but also on (euro zone) states."

The Greek government's decision brought a sharp rebuke from a former industry minister and close ally of Sarkozy within his UMP ruling party, Christian Estrosi, who called the move "totally irresponsible."

"When we are in a crisis situation and others want to help you it is insulting to try to save one's skin rather than to face one's responsibilities," said Estrosi.

Far-right leader Marine Le Pen, who is seen winning 10 percent of the vote in next year's presidential elections with calls for more protectionism and for France to leave the euro, said it was time for European leaders to come up with a "plan B" to prepare an exit from the euro before "catastrophe and panic" strikes.

"We tried to gain time at an exorbitant cost for the people knowing that the end was inevitable," Le Pen told i-Tele television.

"We now need to get round the table and prepare a concerted, intelligent plan to leave the euro with our European partners. This mad dash must end otherwise there will be revolt among European people."

(Writing by John Irish; Editing by Andrew Roche)