Splits over Greek loans continue

Germany stuck to its guns yesterday in demanding that private investors contribute to a second bailout for Greece despite a European Central Bank warning against triggering market turmoil.

The lower house of the German parliament backed extra loans for Greece after the Finance Minister Wolfgang Schäuble said private creditor participation in a new package was "unavoidable".

But the risk premiums on peripheral eurozone bonds rose further amid fears changes to Greek debt terms could trigger a "credit event", in effect a default. EU leaders are due to finalise the new rescue at a summit in a fortnight.