French president Nicolas Sarkozy and German chancellor Angela Merkel will hold an emergency meeting with Greece tomorrow to push for a quick implementation of Athens' bailout deal, the "only solution" to its debt crisis, Mr Sarkozy said today.
Markets tumbled across Europe in response to the announcement by the Greek government to hold a referendum on the agreement which is expected to take place in a few weeks.
Last week's €130 billion bailout package had raised hopes a line could be drawn under banks' Greek losses and euro zone bonds could be sold to China and other investors.
"This announcement took the whole of Europe by surprise," Mr Sarkozy said in a rare televised address on the steps of the Elysee palace in Paris.
"The plan ... is the only way to solve Greece's debt problem," he said after a lengthy meeting with his top ministers and the central bank governor to discuss the referendum decision.
Mr Sarkozy said a hastily arranged meeting for tomorrow afternoon in the Riviera resort of Cannes with his German counterpart Angela Merkel, Greek prime minister George Papandreou, European Union and IMF officials would "examine the conditions under which the commitments made could be maintained."
The meeting comes just before a November 3rd-4th gathering of G20 heads of states in Cannes and will attempt to reassure world powers that the euro zone can resolve its crisis.
After an earlier call with Ms Merkel, Mr Sarkozy's office said the two countries were "determined" to ensure, the full implementation of the October 27th deal in the quickest time frame.
Share prices of French banks and other lenders exposed to Greece and other weak euro zone countries slumped today.
Societe Generale tumbled 16.2 per cent and BNP Paribas and Credit Agricole fell more than 12 per cent. They are among the most exposed to Greece through sovereign debt holdings and loans.
The Greek government's decision brought a sharp rebuke from a former industry minister and close ally of Mr Sarkozy within his UMP ruling party, Christian Estrosi, who called the move "totally irresponsible".
"When we are in a crisis situation and others want to help you it is insulting to try to save one's skin rather than to face one's responsibilities," said Mr Estrosi.
Reuters