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Riot police in Bahrain fired tear gas and stun grenades Thursday to disperse thousands of opposition supporters gathered near the square that was the epicenter of the nation’s Shiite-led demonstrations earlier this year, an activist said.

The violence is a setback to efforts by the tiny island’s Sunni rulers trying to open reconciliation talks with the Shiite opposition in the Gulf kingdom.

Activist Nabeel Rajab said the protesters at Manama’s Pearl Square chanted: “Down, down Hamad” _ a reference to the Bahraini monarch. They also demanded that all demonstrators, opposition leaders and activists, detained during the deadly crackdown on the Shiite-led campaign for political freedom and greater rights, be released.

No injuries were immediately reported during Thursday’s demonstration.

The violence came a day after Bahrain’s King Hamad bin Isa Al Khalifa announced the creation of an independent commission that will investigate allegations that protesters’ rights were violated during the anti-government demonstrations that erupted in February.

The announcement was an apparent effort by the Sunni monarch to draw opposition groups into the government-sponsored talks, set to begin on Saturday.

Washington has encouraged dialogue in the island nation, home to the U.S. Navy’s 5th Fleet, and had urged the monarchy to meet some of the opposition’s demands.

But the king’s appeal for dialogue got a cool reception from opposition groups. The leaders of the biggest Shiite party, Al Wefaq, have not yet decided whether they will join the talks.

Reports by Bahrain’s rights groups that another protester died on Thursday as a result of injuries he sustained during the unrest could further erode Wefaq’s appetite for reconciliation talks with the monarchy.

The death of 30-year-old protester Majid Ahmed Mohammed brings to 32 the number of those killed since February, when Bahrain’s Shiites _ inspired by uprisings elsewhere in the Middle East _ started a campaign to end the Sunni minority’s hold on power. Four people have died in custody.

Bahrain’s Health Ministry confirmed Mohammed’s death in a brief statement, which said he died Thursday morning in a military hospital.

In another move to draw the reluctant Al Wefaq into the talks, authorities on Thursday halted bringing anti-government protesters to trial at a special tribunal with military prosecutors and transferred the cases to civilian courts, a lawyer said guaranteed high risk personal loans. The practice has been criticized as unfair by rights activists and the Gulf kingdom’s Western allies.

The special tribunal was set up in March, when Bahrain’s Sunni rulers imposed martial law to help quash protests by Shiites demanding political freedoms and greater rights. The trials of dozens of opposition figures, human rights activists and Shiite professionals continued even after the emergency laws were lifted earlier this month.

A lawyer for a doctor who is among 47 health professionals on trial after they treated injured protesters said the proceedings have been moved to civilian courts. The medical staff are charged with participating in an effort to topple Bahrain’s monarchy.

A hearing in the case of 20 doctors set for Thursday was canceled, the lawyer said, speaking on condition of anonymity for fear of jeopardizing clients in custody.

In his speech Wednesday, the king said Bahrain is committed to reform and respecting human rights. But he accused the protesters of pushing the country into a “state of chaos” with the street marches and sit-ins during the turmoil.

The king said the government will not interfere in the commission’s probe into what he called the “unfortunate events” of February and March. The commission is to report its findings by Oct. 30.

The chairman of the five-member international panel, Mahmoud Cherif Bassiouni, on Thursday lauded the setting up of the commission.

“It is an important and a historic decision for an Arab Muslim country that has gone through a difficult time to have an independent investigation into what happened, irrespective of where the chips might fall,” Bassiouni told The Associated Press over the telephone.

U.N. High Commissioner for Human Rights Navi Pillay, who has repeatedly spoken out about accusations of abuse by Bahraini authorities, welcomed the formation of the commission and called it a “major development in Bahrain” during a news conference in Geneva on Thursday.

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During her interview for the top job at the International Monetary Fund last week, Christine Lagarde noticed a striking pattern.

All the questions came from men.

“There was not one single woman,” the French Finance Minister said Tuesday on French television.

Now there is.

On Tuesday, the IMF’s 24-member board decided she should become the first woman to lead the global lending organization, which is recovering from a sex scandal involving the man she’ll replace.

When she begins a five-year term next week, Lagarde will take charge of a melting pot of international elites _ one that was known for male-dominated clubbiness well before the scandal involving Dominique Strauss-Kahn, her predecessor.

In her remarks to French television, she spoke to the cultural shift her selection represents.

“While I was being questioned for three hours by 24 men, I thought, `It’s good that things are changing a little,’” she said.

Not everything will change. Lagarde will become the 11th European to lead the IMF, extending a streak that began with the organization’s creation in 1945. Among the challenges that await her, she must prod fellow Europeans to take painful steps to prevent a default by Greece.

She’ll also face pressure from developing nations that want a greater voice at the IMF.

“I am deeply honored by the trust placed in me,” Lagarde said in a statement in Paris after the vote.

Should Lagarde, 55, succeed in changing the IMF’s culture, it may have less to do with her gender and more with her experience in corporate America.

Before she entered politics in 2005, Lagarde led the Chicago-based international law firm Baker & McKenzie for five years. American management tends to be less tolerant of sexual scandals and more likely to educate its staff on reporting harassment. At the IMF, Lagarde is likely to stress accountability and establish channels for reporting workplace grievances.

Her selection became all but assured once the Obama administration endorsed her earlier Tuesday. She had also won support from Europe, China and Russia. Mexico’s Agustin Carstens challenged her, but his candidacy never caught fire.

Lagarde said her first priority is to unify the IMF’s staff of 2,500 employees and 800 economists and restore their confidence in the organization.

She also said she wants to meet with Strauss-Kahn, if permitted to by the U.S. government. Strauss-Kahn resigned last month after being charged with sexually assaulting a New York City hotel housekeeper. He has denied the charges.

“I want to have a long talk with him, because a successor should talk with their predecessor,” Lagarde said in the interview on French television channel TF1. “I can learn things from what he has to say about the IMF and its teams.”

Lagarde will be the first IMF leader who isn’t an economist. She has spent much of her career in the United States and speaks impeccable English.

As one of the longest-serving ministers under French President Nicolas Sarkozy, she made the country’s labor rules more flexible. Forbes has listed her among the world’s most powerful women.

Most urgently, she will be expected to help stabilize Europe’s debt crisis.

“This will put her in the position to work more closely with her European counterparts and push them if needed,” said Domenico Lombardi, a senior fellow at the Brookings Institution and a former member of the IMF’s executive board.

Lagarde probably won’t have much impact on the next round of assistance likely to be provided to Greece, which is currently being negotiated, analysts said.

But eventually, European leaders and the IMF will be forced to forge a permanent solution to Greece’s crisis. That could happen as soon as next year, said Michael Mussa, a senior fellow at the Peterson Institute for International Economics.

It’s likely to involve restructuring some of Greece’s debt, which means that European banks and governments are likely to take losses, he said. That will test Lagarde’s political and negotiating skills.

“There’s going to be a lot of issues that need to be resolved,” Mussa said. “And the question of who will ultimately get stuck with the cost is one of the toughest ones.”

Under an informal arrangement dating to the end of World War II, a European has always lead the IMF and an American has run its sister organization, the World Bank.

Lagarde helped lead negotiations for a bailout package last year that combined European Union and IMF funds in a pool to aid highly indebted European countries. Some experts say Europe’s leaders have been too timid in responding to the crisis and have been discredited by their failure to solve it for good.

“Everyone’s credibility was damaged by advancing a plan that was not viable from the get-go,” said Barry Eichengreen, an economics professor at University of California, Berkeley.

Lagarde moved to address that criticism last week when she met with IMF’s board. She told the board there was “no room for benevolence when tough choices must be made, and there is no option that does not start with difficult but necessary adjustments by the Greek authorities.”

A default by Greece would reverberate well beyond Europe. Such dangers help explain why even some developing countries, like China, backed Lagarde’s candidacy, Lombardi said. China owns billions in euro-dominated bonds. It has no interest in seeing the European debt crisis worsen.

Lagarde is also expected to appoint a Chinese official, Zhu Min, to a top deputy position, Lombardi said. The United States will likely keep the No. 2 spot at the IMF. It was held by John Lipsky, who will leave the IMF in August.

She also will be expected to boost morale among the staff in the wake of the Strauss-Kahn scandal. Strauss-Kahn was also reprimanded in 2008 for having an affair with a subordinate, though he faced no disciplinary action.

Lagarde’s support for gender equality in the workplace might help her put her stamp on the organization, said Susan Schadler, a former IMF deputy director who is a senior fellow at the Centre for International Governance Innovation.

“The IMF’s culture is no different than any institution in the financial sector: It’s dominated by men,” Schadler said. “But I would imagine she would be a good influence and improve the environment.”

Analysts say the IMF’s culture is evolving, however gradually. Lagarde’s appointment puts two women in key roles at the organization. In April, Nemat Shafik, an Egyptian economist, was named a top deputy.

Shafik said last month that the IMF is boosting its efforts to recruit women. The fund wants 25 percent to 30 percent of its management positions to be held by women by 2014, Shafik said.

Other analysts noted that as a European and as a woman, Lagarde is both a conventional and a bold choice to lead the IMF. Like her predecessor, she represents the French elite. But as the first woman to lead the organization, she represents a break with history.

“She’s the old guard and the new guard,” said David Bosco, an assistant professor of international politics at American University.

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Troubled car maker Saab Automobile AB has received a euro13 million ($18.4 million) car order from a Chinese company that could help pay salaries to its employees, its owner Swedish Automobile AB said Monday.

The company, previously known as Spyker Cars, claimed the deal would provide the ailing car brand with enough funds to also pay back parts of its debt to suppliers, but didn’t reveal the name of the Chinese company.

Last week, Saab said it had run out of cash to pay its 3,700 workers, raising doubts over how long the brand could survive.

Saab spokesman Eric Geers on Monday said the company hopes a prepayment from the Chinese company for the cars will allow it to pay the salaries, which were due last Friday, this week.

Swedish Automobile, which bought Saab from General Motors Co. last year, said it continues to hold talks with several parties to raise more cash for the brand. Among other things, it is in talks to sell and lease back Saab’s real estate.

Shares in Swedish Automobile rose by 21.4 percent to euro1.19 ($1.69) on the Amsterdam Stock Exchange.

Separately, Geers said two union members and Saab’s General Counsel Kristina Geers have resigned from the board of Saab Automobile, leaving Swedish Automobile CEO Victor Muller as the only board member fast payday loan.

“We very much regret the current cash shortage which is causing undeserved hardship to all and we are working relentlessly to resolve the current situation,” Muller said.

Muller said Russian businessman Vladimir Antonov is still interested in investing in Saab, but he has so far failed to receive the necessary approval from the European Investment Bank.

“Antonov can provide much needed financing and/or capital to Swedish Automobile/Saab Automobile at this critical time. We are pushing hard to obtain this vital clearance as soon as practically possible,” Muller said.

EIB spokesman Par Isaksson declined to comment on the bank’s review of Antonov, saying only that it examines all proposals to change the lending agreement thoroughly.

Antonov has previously said he is prepared to invest between $50 million-$150 million in Saab. He was forced out of Spyker as part of its deal with GM amid reports of money laundering. He has denied those allegations and has never been charged.

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Libyan authorities on Saturday accused NATO of killing 15 people in an airstrike that hit a restaurant and bakery in the east, though the alliance said there were no indications that civilians had died.

It was the latest outcry from Libyan leader Moammar Gadhafi’s government blaming NATO for killing civilians amid a four-month uprising that has sparked a civil war. NATO insists it does all it can to avoid such casualties.

Meanwhile, rebel representatives said their fighters were coordinating around the country for the “zero hour” when their forces would reach the capital of Tripoli.

The rebels said they have been working to cut fuel supplies from Tunisian borders in an attempt to paralyze Gadhafi’s forces. Rebels also are making homemade bombs and trying to ferry other weapons to their comrades in Tripoli, a spokesman for an underground guerrilla group there said.

Libya’s state news agency quoted a military official in Gadhafi’s forces as saying that NATO warplanes hit a number of civilian sites Saturday in the oil town of Brega, including a restaurant and a bakery.

The official said 15 civilians were killed and 20 wounded in the strike. The JANA news agency also claimed five civilians were killed Friday in Brega as well.

A NATO official said alliance warplanes had hit several targets in the vicinity of Brega, but dismissed claims that the attacks had resulted in civilian casualties.

“We have no indications of any civilian casualties in connection with these strikes,” said the official, who spoke on condition on anonymity because he was not authorized to speak to the media on the record. “What we know is that the buildings we hit were occupied and used by pro-Gadhafi forces to direct attacks against civilians around Ajdabiya.”

NATO has acknowledged carrying out two raids near the strategic oil town. The alliance said Friday it hit multiple military command sites near Brega, which has been a frequent flashpoint between rebels and Gadhafi’s forces.

The alliance said Friday that government forces had moved into buildings in an abandoned area of Brega and started using them as military compounds to launch strikes on civilians, putting rebel-held cities such as Ajdabiya and Benghazi at risk.

Reports of civilian casualties have provoked intense anger among many Libyans in the west of the country under Gadhafi’s control.

Images of dead civilians, including young children, described by the government as “martyrs” can be seen frequently at pro-government rallies and on state-controlled television.

NATO is investigating whether one of its airstrikes may have slammed into a civilian neighborhood in Tripoli on June 19, killing several civilians.

A day later, alliance warplanes struck a family compound belonging to a close Gadhafi aide, killing what the Libyan government says was 19 people, including at least three children. NATO called the site was a “command and control” center, and said it regrets any civilian deaths that resulted from the strike.

Meanwhile, at least two explosions could be heard in the capital of Tripoli on Saturday, though it was not immediately clear what the NATO airstrikes may have hit.

The Libyan rebels began their uprising in February against Gadhafi, who has been in power since 1969. The conflict has turned into a civil war, and Gadhafi’s forces are accused of orchestrating deadly attacks on civilians.

The rebels have taken over much of the eastern half of Libya. They also control pockets in the west, including the vital port city of Misrata, about 125 miles (200 kilometers) from the capital.

A coalition including France, Britain and the United States began striking Gadhafi’s forces under a United Nations resolution to protect civilians on March 19. NATO assumed control of the air campaign over Libya on March 31 and is joined by a number of Arab allies.

On Saturday, the spokesman of the rebels’ western mountain military council confirmed that rebels are coordinating with individual cells and with an underground rebel guerrilla group known as the Tripoli Council. The main goals are to cut the fuel from Gadhafi forces, Gomaa Ibrahim said.

Meanwhile, a spokesman for the Tripoli Council said that their fighters have been carrying selective attacks on Gadhafi forces in the capital.

The spokesman, who requested anonymity for fear of reprisals, said that the rebels are coordinating for “the zero hour, when rebels from liberated cities enter Tripoli.”

“It will be a tremendous mission. The city is now besieged by 13 different security brigades, well armed and well equipped. Gadhafi has always said that his loyalists will sabotage the city if he falls. So this will be our mission: to mob it and clean it of mercenaries.”

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Greece’s opposition leader wasn’t invited to Thursday’s European Union summit but he became its hapless star.

Antonis Samaras wants to block spending cuts, tax increases and economic reforms that Greece has to approve to win more loans next month and avoid what some fear would be economic catastrophe.

Samaras came to Brussels for a meeting on the sidelines of the summit and pushed other European conservative leaders to back a “corrected” version of the plan.

But he swiftly came under fire from the leaders of Germany, Netherlands and Sweden _ in an unusual case of collective meddling by EU leaders in a member country’s domestic politics.

EU leaders have been struggling for more than a year to keep Greece’s debt woes from bringing the rest of the eurozone down, and some appear to be losing patience.

Germany’s Angela Merkel said Samaras’ conservative party _ which was in power for years before rival Socialists took over and acknowledged crushing debt problems _ should take its “historical responsibility.”

Sweden’s Prime Minister Fredrik Reinfeldt said: “It is very important that no Greek political leader tells the Greek people that they have a shortcut.”

Samaras acknowledged that he came under pressure Thursday by other European conservative leaders to lift his objections to the bailout agreement. But it’s unclear how much they chipped away at his resolve.

“European leaders listen to our view. Some agreed with our position, but most stuck to their own positions,” Samaras told Greek state-run NET television. “I explained to them that we cannot give our backing to a mistake.”

Samaras, a U.S.-educated economist, is a controversial figure in Greek politics, too.

He spent years in political exile after forming a breakaway party in the early 1990s that caused a damaging split in the conservative electorate.

A few months after he was elected leader of the New Democracy party, he expelled his predecessor after she voted for last year’s international rescue package for Greece.

Without the next euro12 billion ($17 billion) installment of its existing euro110 billion bailout, Greece will default on its massive debt my mid-July. The country is also negotiating a second rescue package as it remains stuck in recession and locked out of international debt markets.

Samaras’ party has stubbornly refused to back Socialist Prime Minister George Papandreou over the bailout program, arguing that its excessive reliance of tax hikes is counterproductive and locking Greece’s economy in recession.

Surprise talks with Papandreou this month to form a grand coalition government collapsed. Samaras’ party recently took a slim lead in opinion polls, after trailing for three years.

As a result, Samaras is demanding early elections.

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Horrendous weather and a public transport strike caused chaos at the Paris Air Show on Wednesday, delaying a raft of order announcements for Airbus and dampening the mood at Boeing’s unveiling of its new 787 jet.

Airbus had scheduled three order announcements before noon but pouring rain aggravated already overloaded highways, preventing at least one of the jet maker’s customers from making it to the air show on time.

Getting to Le Bourget Airport, only nine miles from central Paris, should take just 25 minutes but access has taken up to two hours some mornings because of heavy traffic and a strike by train drivers.

With news conferences delayed, Airbus had to make due with just a written announcement for its first order of the day, a deal for six A350 long-range jets from Kuwaiti leasining company ALAFCO.

Boeing, meanwhile, showcased its 787 jet, dubbed the Dreamliner, for the first time despite the bad weather.

Japan’s All Nippon Airways announced Wednesday it expects to receive the first of the much-delayed 787s in August or September, and have a total of 14 of the revolutionary composite jetliners by next March payday loans. The airline has 55 of the planes on order.

Developmental problems have delayed the twin-engine jet’s introduction into passenger service by more than three years.

Chicago-based Boeing has announced fewer new orders in Paris than Airbus, but the arrival of the 787 late Tuesday caused a lot of neck craning by attendees. The plane goes on demonstration Wednesday.

Airbus has booked over $25 billion in orders and commitments for new aircraft at this year’s air show, including a raft of orders for its A320neo, a fuel-efficient workhorse that airlines are eager to buy because of the 15 percent fuel savings Airbus boasts the jet will achieve.

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Hundreds of new website suffixes should begin appearing by late next year after the organization that oversees the Internet address system voted Monday to greatly expand domain names.

The new domains could be categorized by subjects including industry, geography and ethnicity and include Arabic, Chinese and other scripts, the Internet Corporation for Assigned Names and Numbers said at a meeting in Singapore.

“This is the start of a whole new phase for the internet,” said Peter Dengate Thrush, chairman of ICANN’s board of directors. “Unless there is a good reason to restrain it, innovation should be allowed to run free No teletrack payday loans.”

ICANN’s decision culminates six years of negotiations and is the biggest change to the domain name system since .com was introduced 26 years ago.

ICANN will receive applications for new domain names _ the fee is $185,000 and the form is 360 pages _ for 90 days beginning January 12.

ICANN said in a statement that it will embark on a global communications program to raise awareness of the opportunities to new domain names.

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OTTAWA

A cheaper source of fuel, a dedicated sales team and workforce, and an investment in a tissue machine will help the last paper mill in New Hampshire’s North Country succeed, state and mill industry representatives say.

The changes come to the mill in Gorham as the papermaking industry fights growing competition from overseas plants in recent years. Some mills in northern New England have had staying power because they have developed business in specialized papers. Others have had to contend with rising oil costs to run the plants and a loss in demand as email and the Internet have replaced the need for some types of paper.

The Gorham mill, shut down for eight months but newly acquired by a New York private equity firm, is scheduled to reopen Wednesday with the startup of its paper towel machine and at least 70 of its approximately 240 workers called back. The plans are to add more staff and operations in July.

“They’re concentrating on areas that they can be strong on, that there’s a little bit less competition _ towel and tissue is a little bit more difficult to, let’s say, import from Asia and make it feasible,” said George Bald, commissioner of New Hampshire’s Department of Resources and Economic Development. “I just know that they are sharp people, they have been successful and they want to show that they can make this a very good success as well,” he said of Patriarch Partners, led by CEO Lynn Tilton.

Tilton, whose firm specializes in buying distressed manufacturing businesses and bringing them back to life, recently met with the mill workers and state and local officials who worked on finding a buyer after the last owner, Fraser Papers, declared bankruptcy in 2009.

“If I can show America a fairy tale of business owner and worker _ and government and business _ coming together to rebuild our country, then others will do it,” Tilton told the crowd. “It will take all of us to do it.”

Tilton plans to spend the money to convert the mill’s fuel source from oil to gas in about five months. “It’s a must,” she said. The gas line has been secured that would supply power to the mill from a landfill.

She said the largest investment will be a tissue machine, “so we can battle against foreign imports.” She estimated it would take about a year to build the machine and get it operating.

Tilton said one reason she took interest in Gorham was because Patriarch had bought the Old Town Fuel & Fiber mill in Maine a few years ago, the firm’s first mill venture.

Old Town’s owner had filed for bankruptcy. The mill had been selling pulp to customers such as the Gorham mill, but also was researching the development of biofuels.

“We got the mill back up and running, we put all the workers back to work, we were able to make money and we’re building a biorefinery,” Tilton said. “We’re going to be the first to make jet fuel out of wood on a mill level credit reports free. Everybody, every day is proud of the work we do together. So that is what gave me the inspiration to be here.”

Maine has about 10 paper mills and still is regarded as the No. 2 papermaking state by volume, behind Wisconsin, said John Williams, president of the Maine Pulp & Paper Association, a trade group. Some have succeeded in making coated papers for magazines and catalogs, and in tissue production. They have been able to hire more staff. Others, such as two Katahdin region paper mills that closed, struggled to find alternative fuel sources and cope with decreasing demand for certain products.

“The hope is someone will come in and buy those mills,” he said. Talks have been going on between the state and possible investors.

New Hampshire has seen a steady decline in paper mill jobs. Dennis Delay, an economist with the New Hampshire Center for Public Policy Studies, said New Hampshire had about 7,000 jobs in the paper industry until the mid-1970s, but then the decline started. “We were down to 4,000 jobs in paper by 2000, and dropped to 1,400 jobs in paper by 2009,” he said.

Northern New Hampshire, once populated by about a half-dozen paper mills, has seen them all close, the most recent being pulp and paper mills in Berlin and Groveton.

“Pulp is very, very competitive _ that again is coming from South America and Asia,” Bald said. The mills also were selling specialty papers, such as for financial reports, but the demand for that had lessened. “Unfortunately, those things a lot of people now get by email,” he said.

One mill that has had staying power in New Hampshire is Monadnock Paper Mills in Bennington. It’s been running since 1819.

Company CEO Richard Verney, whose family bought the business in 1948, talked about strategizing going as far back as the late 1960s and early 1970s: “We tried to find relatively small niche markets where we thought we could provide a product that had value and we keep at that. It’s a continual process of trying to find specialty markets as opposed to commodity markets.”

He said a lot of products have started out as specialties, such as disposable diapers, when many families were using cloth ones. Then as the volume grew, they became commodities. “You wouldn’t think of not using them,” he said.

Verney, whose mill employs about 150 workers and makes high-quality, uncoated printing papers and some coated papers for wallpaper and sandpaper backings, suggested that Gorham, too, would have to find markets for higher values than they presently manufacture for.

“You have to stay at it, and products that we’re making today a few years down the road, we won’t be making,” Verney said.

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The escalating political crisis in Greece sent shockwaves through markets Thursday and fueled a sense of inevitability that the eurozone is about to face its first debt default.

While Greek Prime Minister George Papandreou is preparing to reshuffle his government in an attempt to get austerity measures through Parliament, European policymakers expressed their dismay as they prepare for what could be a crucial meeting of EU leaders in a week’s time.

“What we need most today, is unity,” said French President Nicolas Sarkozy. “We have to leave the national fights behind us to find our sense of common destiny again.”

As events unfolded and uncertainty grew, experts became increasingly convinced that some form of debt default by Greece is now inevitable.

If Papandreou does not get his austerity plan approved, the country won’t get its next rescue loans and would have to renege on its debt obligations.

But in order to help Greece, some form of default may also be required. In recent weeks, Europe’s top financial authorities have been at loggerheads over how to get private creditors to share the pain, a move experts say could be considered a default.

That could heap massive pressure on the continent’s banks, particularly if investors become convinced that other bailout recipients Ireland and Portugal will be next.

A European Central Bank official warned that the EU’s crisis bailout fund would have to double to euro1.5 trillion ($2.1 trillion) if Greece fails to pays its debts, spreading financial turmoil.

Nout Wellink told Dutch paper Het Financieele Dagblad that “if you fall through the ice you better have a very large safety net.”

European officials are talking about more aid to keep Greece from defaulting but the political chaos has thrown everything into question. And the uncertainty has hit sentiment in markets around the world.

“Talk of the bailout fund being doubled in size, a Greek government reshuffle, and Greek PM Papandreou offering to resign, doesn’t offer a stable back drop for investors,” said Michael Hewson, market analyst at CMC Markets.

Stock markets across Europe fell sharply on Thursday, a day after they suffered big losses as protests in Athens turned violent and Papandreou sought, but ultimately, failed to create a coalition government, even offering up his job in the bargain.

By late-morning London time, the euro was down at $1.4072 _ its lowest level since May 26. Thursday’s decline means that the single currency has fallen around four cents since Greece’s government appeared to be on the verge of collapse Wednesday.

In Paris, Sarkozy urged other European leaders to find a compromise on Greece’s debt crisis to stabilize the euro. The Greek crisis will likely be at the forefront of discussions between Sarkozy and German Chancellor Angela Merkel on Friday.

Sarkozy said compromises to “preserve the stability of the eurozone were needed now….Because without stability, no growth is possible,” Sarkozy said at a conference of international farmers.

The potential of a Greek debt default to inflict damage on France, Europe’s second biggest economy, was evident Wednesday when Moody’s warned that three of the country’s biggest banks were at risk of a credit downgrade because of their exposure to Greek debt.

Ahead of another round of meetings of eurozone finance ministers and EU leaders next week, there’s increasing speculation that a deal that involves the private sector sharing some of the bailout burden will have to be struck if Greece is to avoid default.

That’s not proving to be easy, with Germany and the European Central Bank seemingly at loggerheads over the issue.

Another top ECB official, Juergen Stark, said the bank could envision involving bondholders, but stressed that any such step must be completely voluntary.

“We are not against involving the banks, not against involving the private sector in financing Greece, but it must be completely voluntary, otherwise it will have negative consequences for the financial markets and negative consequences possibly for other countries,” said Stark, a member of the bank’s six-member executive committee.

“It is not just about Greece, but also about the other countries that at the moment are likewise in EU and IMF programs.”

Stark said he had sympathy for the viewpoint that taxpayers not be expected to fund all of the bailout efforts, but warned that the concern was the risk such a step would have for triggering serious financial market disruption.

“I have great understanding for this argument, that one demands burdensharing between taxpayers on the one side and the private sector on the other, but once again: it’s about far reaching effects that must be kept in view, if one broaches such an idea and then carries it through to a political decision,” Stark added.

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David McHugh in Frankfurt, Toby Sterling in Amsterdam and Raf Casert in Paris contributed to this story.

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