World financial markets are poised for further turbulence as a result of the UK's political stalemate from last week's election and continued efforts over the weekend to prevent the euro crisis from spreading.
In London, all-day talks between the Conservative and Liberal Democratic parties have yet to reach agreement on a possible power-sharing deal to form a new Conservative-led government.
The Conservatives gained the most seats but fell short of a majority, leaving the Liberal Democrats holding the balance of power.
The most favoured course is an agreement between David Cameron’s Tories and the Nick Clegg-led Lib-Dems, who together hold a comfortable majority over Gordon Brown's defeated Labourites.
The negotiations are aimed at reaching agreement ahead of Monday’s opening of financial markets tonight (NZ time).
The combination of UK political uncertainty and widespread anxiety elsewhere over the Greek debt crisis has some analysts warning that the pound, shares and other financial assets could face more pressure in the days ahead.
Europe's sharemarket fell the most in 18 months on Friday and that was followed by another substantial fall on Wall Street.
Meanwhile, EU finance ministers met over the weekend in Brussels to discuss establishing a new "stabilisation mechanism" to prevent the Greek debt crisis from spreading to other countries that use the euro currency.
They discussed extending some emergency funding, currently only available to non-eurozone members, to the single currency bloc.
Under the proposals, the commission would borrow money for the stabilisation mechanism directly on the markets to guarantee troubled country's debts.
Officials hope the loan guarantees will prevent the crisis in Greece spreading to other eurozone countries with high deficits or debts as well as low economic growth, most notably Portugal, Spain and Ireland.
The leaders of the 16 countries that use the single currency approved an €110 billion loan package to Greece. In Washington DC, the IMF's board approved its €30 billion tranche of this loan.
Back in the UK, political negotiations centre on how to handle the government deficit and ways to maintain economic stability.
"We intend to meet again over the next 24 hours. We are agreed that a central part of any agreement that we make will be economic stability and a reduction of the budget deficit," said Conservative foreign affairs spokesman William Hague, who is on his party's negotiating team.
Lib-Dem negotiator Danny Alexander said "any agreement made will have deficit reduction and economic stability at its heart."
Mr Brown, who remains prime minister until a new government is formed, has had his own meeting with Mr Clegg. Mr Brown has said he will try to forge a coalition with the Lib-Dems if negotiations with the Tories fail.
Mon, 10 May 2010