German Chancellor Angela Merkel and Mexican President Felipe Calderon… (Peer Grimm / MCT )
LOS CABOS, Mexico — Relief over the pro-euro currency vote in the Greek elections quickly faded Monday amid signs of persistent troubles for the Eurozone, as world leaders grappled with the grim reality that Europe's debt and political crises are far from over.
Greek conservatives, who support a bailout for the struggling nation, scrambled to form a coalition government after winning national elections Sunday but fell short of an outright majority in Parliament.
Stocks fell sharply in Italy, and the cost of borrowing for Spain reached a euro-era high amid investors' fears that it would become the next Eurozone nation to request a full-fledged government bailout.
"The performance of the financial markets in Spain and Italy on Monday suggests that Eurozone policymakers will need to take much greater action," said Julian Jessop, chief global economist at Capital Economics in London.
The angst in Europe was palpable in Los Cabos, Mexico, where the Group of 20 nations is holding a two-day summit.
European officials at the gathering aren't expected to announce new steps to ease the crisis. But they are hoping they can reassure global markets when they meet June 28 for their own top-level meeting. At that time, they are expected to lay out plans for a banking union and other moves to strengthen the region's integration and reduce economic imbalances.
The presidents of the European Commission and European Council, the executive and strategic arms of the European Union, indicated a willingness to help Athens hit financial targets to meet its bailout obligations, but German Chancellor Angela Merkel insisted that there would be "no loosening of the reform steps" for Greece.
The Greek government "will and must naturally follow through on the commitments that were made," she told reporters.
President Obama has urged Merkel and other European leaders to ease the stringent austerity measures and put a greater emphasis on promoting short-term economic growth. On Monday, he met privately for about 45 minutes with the German leader in what administration officials described as a "constructive" meeting.
"The president was encouraged by what he heard," said White House Press Secretary Jay Carney in briefing reporters about the leaders' hastily arranged bilateral meeting on the sidelines of the G-20 summit.
Obama also was scheduled meet late Monday with Europeans after the formal dinner for G-20 leaders.
Earlier, Obama said the outcome of the Greek elections suggested a "positive prospect" for the teetering European nation.
But in Greece, leader Antonis Samaras of the New Democracy party, the victor of Sunday's elections, sustained a bruising first blow: Syriza, a radical leftist party that came in second in the polls, refused to join forces.
Although widely anticipated, the snub signaled the daunting resistance that a government committed to austerity policies would face from Syriza, the upstart group that tapped deep resentment over brutal budget cuts.
"We will assume the responsibility of the opposition and we plan to keep the government in check," said Alexis Tsipras, the leader of Syriza, which garnered 27% of the vote Sunday, more than double the 12% it won in last month's inconclusive polls.
Sunday's vote was Greece's second recent attempt to end its political paralysis. Reeling from two years of unrelenting austerity that have seen poverty and incivility climb as fast as living standards and hopes have diminished, Greek voters on May 6 punished mainstream parties, lurching to radical left groups and producing a political deadlock that has left the country without a stable government at a critical time.
Failure to form a coalition would force a third election, with the continued stalemate raising doubts about the country's membership in the Eurozone, the nations that share the euro currency.
Under Greek law, Samaras has three days to stitch together an alliance. While a staunch supporter of the shared European currency and Greece keeping the euro, Samaras insisted Monday that the bailout agreement needed to change.
"We will abide by the agreement, but at the same time we're seeking an agreement on policies that will give the Greek people room to breathe," he said.
With the scene in Europe still one of turmoil, its leaders sought Monday to turn some of the spotlight to other nations, saying the continent wasn't the only party in the G-20 that had financial and debt issues to work out.
"We are not coming here to receive lessons in terms of democracy or in terms of how to manage our economy," said European Commission President Jose Manuel Barroso.
He reminded people that Europe was not the origin of the global financial crisis. With 17 nations in the Eurozone, he said, "sometimes it means taking time" to agree on policy actions.
Moreover, he called on non-European G-20 member nations to fulfill their commitments to pony up money for a bailout fund for the International Monetary Fund.
Barroso's at-times defensive remarks reflected the heat the European leaders are feeling here from the heads of other major countries, whose economies are hurting from persistent financial shocks from Europe. One by one, they are urging their European counterparts, who occupy five of the group's 20 seats, to act decisively to resolve the debt crisis.
Times staff writer Lee reported from Los Cabos and special correspondent Carassava from Athens. Staff writer Kathleen Hennessey in Los Cabos contributed to this report.