Greek government workers strike in cuts protest

Strikes grounded flights and halted government services early today, as unions mounted their first major challenge to austerity measures in debt-plagued Greece.

An umbrella union representing civil servants began a 24-hour strike against sweeping government cuts which will freeze their salaries and new recruitment, and an effort to push through fiscal reforms previously delayed for decades.

Greece's largest labour organisation - the umbrella GSEE union - is planning another strike on February 24. But it remained unclear whether the protests will represent the start of a serious labour backlash against the urgent reforms or a demonstration of union dissatisfaction in a country where strikes are common.

Unions ended weeks of caution after Greece's new Socialist government deepened cuts - slashing bonuses and early retirement rights, and even tapping the country's powerful Orthodox Church for more taxes.

Greece is under European Union pressure to cut spending drastically after revealing a massive undeclared budget shortfall last year which continues to rattle the euro and financial markets.

Prime Minister George Papandreou, who was in Paris today to discuss the economic crisis with French President Nicolas Sarkozy, has already faced down a protest by farmers demanding higher subsidy payments who staged tractor blockades on Greek highways for nearly three weeks, ending yesterday.

Mr Papandreou's government announced another round of austerity measures just before today's strike: adding 0.14 euro (12p) in taxes to the price of a litre of regular unleaded petrol, and announcing plans to oblige all Greek businesses - including petrol stations, cab drivers and vendors at farmers' markets - to issue receipts.

Wealthy European countries appear closer to rescuing Greece, and stocks in Europe and the United States rose yesterday on expectations of some kind of decisive action to prevent a Greek debt default which could spread to other countries, undermining Europe's hesitant economic recovery.

European Union leaders are to discuss the issue during a summit in Brussels tomorrow, and officials have said they will issue a statement on Greece.

Markets have reacted well to news that European Central Bank President Jean-Claude Trichet would make a rare appearance at the summit in Brussels - which they saw as confirmation that some kind of help would be discussed.

Today's civil servants' strike halted flights in Greece starting at midnight (2200GMT yesterday), closed state schools and tax offices, and left state-run hospitals running on emergency staff.

Striking civil servants and members of a Communist-backed trade union are planning separate protest rallies in central Athens and the northern city of Thessaloniki.