Greece plans deeper cuts to secure loan

Greece bowed to international lenders yesterday, accelerating its austerity drive in an attempt to secure a crucial €8bn (£7bn) lifeline before its coffers run dry next month.

A deal between Athens and lenders from the EU, the European Central Bank and the IMF appeared to be on the cards after officials said Greece would extend a hike in property taxes, cut pensions and put some 30,000 public sector workers in a "labour reserve" pool with reduced pay. It also plans to lower the tax-free threshold on income to €5,000 as it seeks to ease its debt woes.

The measures are expected to pave the way for the release of the funds that Greece needs to avert a potentially catastrophic default next month, with talks with officials from the troika set to resume next week. Unions have pledged to oppose the cuts with fresh strikes.

With one eye on Greece, markets also kept a close watch on the banking sector amid reports that the Bank of China had curbed foreign exchange trading with France's Société Générale and BNP Paribas, and Switzerland's UBS, which was recently hit by the $2.3bn rogue trading scandal.