ATHENS -- European officials are vowing continuing support for Greece as investors sell off the bailed-out country's stocks and bonds.
The country is being buffeted by a range of concerns, including that the government will be unable to finance itself independently when its bailout loans end and that its banks remain shaky.
Investors have also been spooked by the prospect of new elections that could bring to power the left-wing Syriza party, which wants to renege on a part of Greece's debt. A broader global market sell-off has only made matters worse.
"There should be no doubt that Europe will continue to assist Greece in whatever way is necessary" so the government can keep financing itself, said Jyrki Katainen, vice-president of the European Union's executive Commission, in a statement Thursday.
The European Central Bank is also ready to make more credit available to Greek banks, according to a person familiar with the matter who did not want to be identified because the step has not yet officially been made public. The ECB would do that by providing more credit against collateral such as Greek government bonds.
Greece's conservative-led government is promising to end a six-year recession this year and cut short the country's bailout program by two years with a full return to markets.
But those hopes were dented this week as the government's borrowing costs on bond markets soared. The rate on the benchmark 10-years bonds jumped to 8.71 per cent from just 5.6 per cent just last month -- a sign investors are more worried the country might default.
The main Greek stock index lost 12 per cent in two days. It was down another 2.5 per cent on Thursday.
In Athens, Finance Minister Gikas Hardouvelis insisted Greece was not sliding back into financial turmoil and remained committed to meeting bailout targets.
"The market atmosphere seen in the last couple of days does not reflect the state of the Greek economy ... Our path to growth is now a reality," he told parliament.
"Of course, the future will not be cloudless but it is certainly not reminiscent of the painful course we took to get here. We can make it."
A senior Syriza official, Dimitris Papadimoulis, denied that market jitters were caused by his party's widening lead in opinion polls, arguing they were triggered by the government's failure to deliver on its promise of an early bailout exit.
Greece ran up too much debt and needed 240 billion euros ($307 billion) in bailout loans in 2010 and 2012 from other countries that use the euro and the International Monetary Fund. The bailout enabled the government to finance itself after market borrowing costs rose higher than it could afford and threatened to push the country out of the euro currency union.
The loans from euro countries will stop at the end of this year, while those from the IMF are due to end in 2016.
McHugh contributed from Frankfurt, Germany.