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The Greek cabinet approved late on Friday a draft law setting out the tough reform and austerity program it needs to take as the price of a new EU/IMF bailout.

Papademos, who himself has only been in office for three months, might also take the opportunity to reshuffle the cabinet.

Portugal's economy will shrink as much as Greece's this year, according to IMF projections. The two will have identical current account deficits and the red ink in Portugal's budget will be almost as deep as in Greece's.

The union specifically singled out Poul Thomsen, the IMF’s principal official in Greece, for arrest.

U.S. stocks dropped on Friday as the most recent flare-up in Greek negotiations for a financial bailout package put the S&P 500 on track to snap a three-day winning streak.

Stocks dropped on Friday as the most recent flare-up in Greek negotiations for a financial bailout package put the S&P 500 on track to snap a three-day winning streak.

Gold prices fell back Friday, just hours after an apparent deal between debt-choked Greece and potential Eurozone lenders reinvigorated hopes the nation would not be forced to default on its loans.

Greek workers went on strike against austerity measures on Friday, docking ships and halting public transport, hours after euro zone finance ministers said Athens needed to make more cuts to convince them to release a financial bailout.

Greek political leaders said they had clinched a deal on economic reforms and spending cuts needed to secure a second bailout, but eurozone finance ministers demanded more measures and a parliamentary seal of approval. Finance ministers of the 17-nation eurozone meeting in Brussels warned there would be no immediate approval for the rescue package.

Greece's debt crisis on Thursday dominated the first day of Italian Prime Minister Mario Monti's visit to the United States, as he urged the International Monetary Fund to be more lenient with Athens in bailout talks to prevent a big potential explosion.

Negotiations on both sides of the Atlantic Ocean, between Greece and its lenders and between big U.S. banks and the federal government, boosted the willingness of investors Thursday to move into risk assets, many of which posted gains.

Greek political leaders clinched a long-stalled deal on Thursday on harsh austerity measures and reforms required to secure a second international bailout in two years but the country's financial backers reacted skeptically.

The International Monetary Fund and Greek authorities continue talks to finalize details of a new rescue package following an agreement among the country's political leaders, an IMF spokesman said on Thursday.

European Central Bank President Mario Draghi opened the door on Thursday to helping Athens indirectly after Greek politicians finally signed up to an austerity package following days of dither and delay.

The plans underscore concerns in the eurozone about debt and a potential relapse into recession.

Gold prices rose 1 percent on Thursday as the euro rallied to a fresh two-month high against the dollar after Greece clinched a deal with European Union and IMF leaders needed to avoid a messy default.

Greece's jobless rate rose to a fresh record of 20.9 percent in November, highlighting the pain imposed by austerity on ordinary Greeks as the country negotiates a new pain-for-gain package with its EU and IMF lenders.

Greek leaders clinched a long-stalled deal on reforms and austerity measures needed to secure a bailout and avoid a messy default, government sources said, hours before the country's financial backers were to meet in Brussels on Thursday. The euro and European stocks strengthened on news of the breakthrough.

The European Central Bank held interest rates at a record low on Thursday, seeing tentative signs of economic stabilization, but refused to say what part it might play in averting a ruinous Greek default.

Greek political leaders have clinched a deal on austerity measures needed to secure a bailout to keep the country afloat, two government sources said on Thursday.

China's inflation unexpectedly rebounded in January mainly due to gains in food prices and a weeklong holiday. Though this does not change the broader downward trend in inflation and provides room for Beijing to stimulate its economy if the Euro area experiences a sharp recession. It does support economists' view that Beijing will not put in place aggressive stimulus packages as it aims for a smooth leadership transition this year.

Gold edged up along with crude oil and the euro on expectations the Greek prime minister's presence in Brussels Thursday signals a likelihood his nation will receive desperately needed bailout money.

China's stock market improvement could be jeopardized by a higher than expected inflation reading for January.

China's annual inflation rate hit 4.5 percent in January, which is the highest level in three months, according to the official data released Thursday.

Japan's Nikkei average eased from a three-month high to trade below 9,000 Thursday amid uncertainty over the outcome of the Greek bailout talks.

Greek political leaders failed early on Thursday to sign off on a tough reform and austerity program, the price of a new international bailout for the nation, but Prime Minister Lucas Papademos said they would try to strike a deal within hours.

Stocks closed flat in another thinly traded session on Wednesday as Greece remained in a standstill over accepting tough reforms in exchange for a bailout critical to avoiding a chaotic default.

Global securities, whether stocks, commodities or currencies, held earlier gains or losses Wednesday as the world awaited the outcome of talks between debt-choked, strife-torn Greece and benefactors demanding more tax hikes and government budget cuts in exchange for bailout money.

Greece will likely fail to achieve sustainable debt levels if it only resorts to a 70 percent reduction in the value of bonds held by private creditors, Standard & Poor's warned on Wednesday, putting pressure on the ECB to also take losses.