Europe looked on with wary relief on Monday as Greek conservative leader Antonis Samaras launched coalition talks after coming first in a vote that follow weeks of uncertainty over whether the debt-crippled country could remain in the joint euro currency.

A Greek exit from the 17-nation eurozone would have potentially catastrophic consequences for other ailing European nations and hurt the U.S. and the entire global economy as well.

European Union leaders appeared relieved that a pro-austerity government had a good chance of being formed.

“Continued fiscal and structural reforms are Greece’s best guarantee to overcome the current economic and social challenges,” said European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso in a joint statement.

But an early market rally faded quickly on Monday as investors turned their attention back to the other financially unstable economies in the eurozone — Spain and Italy. Sunday’s vote “will probably ease fears of an imminent Greek euro exit,” said Martin Koehring of the Economist Intelligence Unit. “But the key question is how quickly can a government be formed?”

With 129 of Parliament’s 300 seats, the conservative New Democracy party lacks enough legislators to govern alone, and must seek allies among the pro-bailout Socialists, who came third. Mr. Samaras, who now has three days in which to build a coalition, said he wanted to form a government with long-term prospects.

“My position is that there must be a national salvation government with as many parties in it as possible,” he said after talks with Alexis Tsipras, leader of the radical left Syriza party. “I will continue the effort because the country has an immediate need of being governed.”

Strategies

But Mr. Tsipras, whose party came in second, refused to join his coalition. “Our strategies are opposed,” said Mr. Tsipras.

Under former student activist, Syriza campaigned on a pledge to scrap bailout commitments.

The Democratic Left has opposed the harsh austerity program but has said it will do what is needed to help form a strong government.

Final results gave New Democracy 29.66 per cent, followed by Syriza at 26.89 per cent.

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