Official says Greece could seek bond guarantee

ATHENS, Greece

A senior government official says heavily indebted Greece could urge international institutions to buy Greek bonds at a set interest rate if borrowing costs are too high.

Deputy Prime Minister Theodore Pangalos insists that Athens is not asking for money to bail itself out of the crisis, which has undermined Europe's common currency.

He said Wednesday that, in the case of "an unjustified speculative attack," Greece wants guarantees that international institutions "will come and say: 'Look here, I am buying Greek bonds at this price, with this interest rate.'"

Pangalos did not say which institutions he was referring to, or elaborate on the interest rate.

Greece says it doesn't need a bail out and European governments are reluctant to fund one. However, markets think some kind of rescue would be organized if default looms. Speculation has focused on possible guarantees for Greek bonds or help from state-owned banks.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

ATHENS, Greece (AP) -- Greek unions will stage their second nationwide strike in a week on Thursday, shutting down all public services, closing schools, customs and tax offices, halting public transport and grounding flights for 24 hours.

Unions are protesting the Socialist government's harsh austerity measures, designed to curb the country's massive debt and pull it out of an unprecedented financial crisis that has hammered the euro. The measures have cut civil servants' salaries, frozen pensions and increased taxes, including on fuel and general sales tax.

"They are trying to make workers pay the price for this crisis," said Yiannis Panagopoulos, leader of Greece's largest union, the GSEE.

"These measures will not be effective and will throw the economy into deep freeze."

Government officials concede that austerity measures will worsen Greece's recession in 2010. An economic contraction of just 0.3 percent is predicted in this year's budget that was passed before additional cuts were implemented.

Workers are to walk off the job from midnight Wednesday night.

Journalists, teachers, state hospital doctors and air traffic controllers will be among those striking, while officers from the police, fire service and coast guard plan to join protest rallies.

A general strike last Friday was marred by violence during a large protest march. Riot police used tear gas and baton charges against rock-throwing protesters, who smashed banks and storefronts.