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Greek Economy Plunges as Country Faces Vital Bond Auction

Greece plunged deeper into recession official figures showed raising tension over the €3.1bn (£2.4) Athens needs to raise on the bondmarkets today to avoid defaulting on debt due on Monday.

by Louise Armitstead, Chief Business Correspondent

The country’s GDP shrank 6.2pc year-on-year in the second quarter of 2012, based on first estimates, underlining the chronic economic crisis which is hampering Greece’s ability to pay its debts.

In its biggest auction for month, Athens plans to auction €3.1bn in three-month bills to meet the repayment deadline of a €3.7bn loan from the European Central Bank.

The auction is being watched as a indication of the level of support for Greece ahead of a make-or-break few months for the eurozone. It comes amid tough warnings from Germany that Athens must honour its bond agreements of face ejection from the eurozone.

A European Commission spokesman said: “We’re not worried. According to our information the T-bill issuance is fully under control.”

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