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Millions strike in Greece over austerity plans

Greece, the sickest patient in the ailing eurozone, was rocked yesterday by a nationwide strike of millions of workers and hours of rioting in street protests against the government's austerity plans.

The day ended with an announcement by its embattled Prime Minister, George Papandreou, that he would reshuffle his Cabinet in an attempt to push through measures to alleviate the country's crippling debt crisis.

Earlier, he had offered to step down and form a unity government with opposition parties, a gesture he abandoned after the conservative New Democracy demanded Athens renegotiate its year-old, €110bn international bailout.

"Tomorrow I will form a new government and then I will ask for a vote of confidence," Mr Papandreou said in a televised address last night. "I will continue on the same course. This is the road of duty." Government sources added the vote of confidence could be held on Sunday.

Earlier, protesters hurled petrol bombs at the finance ministry and fought with police in central Athens as they tried to prevent MPs from entering parliament to discuss planned new spending cuts and tax rises to stave off a default. Youths smashed store fronts and pulled up paving stones to throw at riot police, who responded with tear gas and stun grenades.

For the past three weeks, protesters have camped out in a square facing parliament, calling on the government to withdraw its plans. They had called for a human chain to encircle parliament, but the blockade was broken by hundreds of police officers who held back crowds to allow official cars to drive up to the building. Street battles spilled into the main shopping area of the capital as store owners hurriedly rolled down metal shutters.

Mr Papandreou's offer to step down added to the growing sense of crisis in Greece and fears of economic meltdown as he seeks to push through a five-year plan to raise taxes and sell off €50bn (£43bn)worth of public assets.

That plan was agreed in exchange for the fifth tranche of the €110bn bailout that has been keeping the country afloat since last May.

But the government's proposals, which would result in the 750,000-strong public workforce being cut by a fifth, have prompted a ferocious outcry. Yesterday's strike shut government offices and schools, and reduced hospitals to a skeleton staff.

Ferries were cancelled, leaving tourists stranded in Athens but flights were unaffected after air-traffic controllers called off their work stoppage. Archaeological sites remained shut.

The new budget plan includes tax rises on soft drinks and restaurant bills, and a crackdown on tax evasion. Failure to push through the measures would prevent the payment of €12bn of aid next month by the EU and IMF, would force Greece into default, and would shock global markets, according to analysts.