European leaders warned on Wednesday that the euro zone debt crisis could spread like a bushfire beyond Greece, and investors sold stocks and the euro as Greek anti-austerity unrest claimed its first lives.

German Chancellor Angela Merkel said Europe's fate was at stake and France declared the euro was under speculative attack but said it would fail, while the Greek government vowed not to retreat a single step despite violence on the streets of Athens.

Three people, including a pregnant woman, choked to death when rioters set an Athens bank ablaze during a protest against wage and pension cuts that were the price of the 110 billion euro ($146.5 billion) EU/IMF bailout agreed on Sunday.

A general strike shut down Greek airports, tourist sites and public services and about 50,000 demonstrators marched against the planned public spending cuts and tax rises, demanding that tax cheats and corrupt politicians be put on trial.

Hundreds of protesters threw stones and bottles at police who responded with tear gas in easily the biggest demonstration since Prime Minister George Papandreou took office last October.

We are deeply shocked by the unjust death of these three people, our fellow citizens, who were victims of a murderous act, Papandreou, who is trying to reform an uncompetitive economy plagued by corruption, told parliament.

Greek civil servants will strike again next week to protest against austerity, public sector union ADEDY said.

Greek governments have a history of backing away from reforms due to public protests but Finance Minister George Papaconstantinou stressed that this time would be different.

We are prepared to pay the heavy political cost, he told parliament during a debate on the austerity bill. We will not take a single step backwards. [nATH005460]

But Merkel said the common currency was in the most serious crisis of its 11-year life, and other euro zone countries could be hit unless the Greek rescue succeeds.

European Monetary Affairs Commissioner Olli Rehn said the crisis must not spread. It's absolutely essential to contain the bushfire in Greece so that it will not become a forest fire and a threat to financial stability for the European Union and its economy as a whole, he told a news conference.

In Helsinki, Finnish Prime Minister Matti Vanhanen acknowledged that the Greek rescue might not stop financial instability from spreading.

One worry was whether Finland gets back the money it lends Athens as its part of the package, he told broadcaster YLE. A much bigger worry is if this (package) will not succeed.

EURO ATTACK

Anxiety that the crisis may spread sent stocks tumbling worldwide, and the euro hit a 14-month low below $1.29, leaving it down 3.5 percent against the dollar this week alone.

French Prime Minister Francois Fillon said the common currency was under attack from financial speculators.

This is not an attack on Greece but on the euro, and it will fail, for two reasons. Firstly, because the euro zone is solid ... and then because we have demonstrated solid solidarity in favor of Greece, he told TF1 television.

In a sign of alarm in Brussels, European Commission President Jose Manuel Barroso also attacked financial speculators, saying the EU executive could move quickly to regulate them further if they acted irresponsibly.

Merkel, whose foot-dragging many analysts have blamed for aggravating the Greek crisis, told parliament the success of the rescue package would determine nothing less than the future of Europe -- and with it the future of Germany in Europe.

Without the aid, a chain reaction threatened to destabilize the European and international financial system, she said in a debate on approving Berlin's 22 billion-euro contribution to the emergency loans for Athens, despite German public hostility.

One leading investment banker drew parallels with a past financial crisis which swept through Asia in the late 1990s.

In some respects what is going on in southern Europe right now feels a lot like what went on in southeastern Asia in summer 1997, said Stephen Roach, chairman of Morgan Stanley Asia.

The IMF ended up bailing out Thailand, where the crisis began, along with Indonesia and South Korea. It's difficult to stop the bleeding with a package directed at only one country, Roach said at a bankers' event in Frankfurt.

BATTERED BANKS

Battered Greek bank shares shed a further 5 percent on news of the deaths, which follow three months of sporadic strikes and street protests.

Shares in Spain and Portugal, seen as the next two targets for investors testing the European Union's will and ability to defend weak euro zone economies, fell for a second day. Lisbon had to pay more than four times its previous yield to sell six-month treasury bills on Wednesday.

The euro hit a 14-month low of $1.2801 and the cost of insuring Spanish and Portuguese debt against default spiked to euro lifetime highs.

Moody's Investors Service put its credit rating for Portugal on a three-month review, and an analyst at the agency said that a downgrade was now likely.

We have sent a signal that it is possible, Anthony Thomas of Moody's Sovereign Risk Group told Reuters. Statistically, there is a very strong likelihood that if we put it on a review for downgrade then we follow through with a downgrade.

Seeking to calm markets, Rehn said Spain did not need an aid mechanism of the kind created for Greece and he was not going to propose one. But he also said the deficit levels of all EU states were worryingly high.

Despite official denials, many economists are convinced Greece will have to restructure its debt, making private investors take a share of the pain.

Concern that the Greek government will be unable to make all the budget cuts agreed with the EU and IMF because of social unrest is one of the drivers of the euro zone turmoil.

Papandreou presented an austerity bill to parliament on Tuesday which foresees 30 billion euros in new savings. It is expected to pass, but the conservative opposition vowed to vote against it, dooming hopes of a political consensus.

Analysts were watching Wednesday's protest for pointers to the degree of mobilization of Greece's powerful trade unions.

So far, demonstrations have been limited to tens of thousands but anger is mounting, with opinion polls showing ordinary Greeks believe they are paying the price of the crisis while tax evasion and corruption go unpunished.

With our strike today we are continuing our fight against harsh and unfair measures that hit workers, pensioners and the unemployed, Yannios Panagopoulos, president of private sector union GSEE, told Reuters.

(Additional reporting by Harry Papachristou and Lefteris Papadimas in Athens, Jan Strupczewski in Brussels and Carolyn Cohn in London, Edward Taylor in Frankfurt, Crispian Balmer in Paris, Andrei Khalip in Lisbon, Eva Lamppu in Helsinki; writing by Paul Taylor/David Stamp; editing by Philippa Fletcher)

Germany International Monetary Fund