Greece short-term bond yields hit high

The sharp sell-off in Greece's short-term bonds entered its seventh consecutive session on Monday, with interest-rate yields on the country's bonds due in 2017 hitting another record high of more than 26 per cent.

The peak on the notes reached 26.968 per cent, while the country's 10-year paper was yielding 13.03 per cent, up 11 basis points.

The moves came after International Monetary Fund head Christine Lagarde urged Greece's governing coalition, led by the populist Syriza party, to set aside its anti-austerity politics and bring reforms to fruition to save the economy and avoid a debt default.

Alexis Tsipras, Syriza's leader and prime minister, has shown a deep reluctance to restart an austerity programme he won power by promising to end, prompting Greece's creditors to freeze extra bailout funds.

Without this funding, the cash-strapped country is likely to run out of money and default on payments due to either the IMF in May or June. In the summer, large amounts of Greek bonds held by the European Central Bank will mature. As yet, there is no clarity on how Athens will repay these.

"We do not expect Greece to exit the eurozone; however, missed payments now seem ever more likely," said Eirini Tsekeridou, fixed income analyst at Julius Baer.

"Tax and pension reforms remain high on the priority list [at talks between Greece and its creditors] and so do privatisations; however, Athens remains reluctant to agree on these hot topics."

Meanwhile, the country's stock market regained its poise, with the Athens General index rising 1.6 per cent to 741.53 in a broad-based advance, with financial stocks prominent on the leader board. Among them, shares in Attica Bank rose 9.5 per cent and Marfin Investments was 5.7 per cent stronger.

The euro was down 0.5 per cent at €1.0754.

Angus Campbell, senior analyst at FX Pro said: ". Chances of a Grexit have been steadily growing, yet the euro has held its ground. The focus will remain on Greece this week ahead of yet another deadline this Friday for the seemingly never-ending negotiations."

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