20 October 2011 Last updated at 10:40 ET

Fighting erupts at mass rally over Greece austerity bill

Rioters have fought other protesters in Athens where thousands of people are rallying outside parliament to condemn a new round of cuts.

Stones and petrol bombs were hurled and fire extinguishers set off as masked youths battled communist-backed trade unionists near luxury hotels.

The trade unionists, who were tasked with keeping at the rally, appeared to charge back, wielding sticks.

The country is into the second day of a 48-hour general strike.

The Socialist-dominated parliament is expected to give final approval to a new austerity bill on Thursday, after giving it preliminary approval in a first vote late on Wednesday by a margin of 154-141 of the 300 deputies.

The bill, which includes tax hikes and pay cuts, is needed to secure EU and IMF bailout loans.

Civil servants, shopkeepers, dock workers, taxi drivers, doctors, lawyers, teachers, construction workers and others were all due to take part in the strike, which began on Wednesday.

'No way'

It was not immediately known how many people were hurt in the fighting but some could be seen with blood streaming from their injuries, and others had their clothes set on fire by petrol bombs.

On Wednesday, at least 40 people had been injured in running battles in central Athens.

At least 35,000 protesters gathered on Syntagma Square, in front of parliament, on Thursday.

"There is no way that we will stop this battle until this government falls, which is one of our demands," the president of the hotel union, Nikos Papageorgiou, told Reuters news agency.

Irini Kyriakidou, a 53-year-old seamstress, said: "What I want to tell the government is that we won't let this pass so easily.

"We will fight so they do not put an end to labour contracts which will put us back a century."

The bill includes plans for further cuts to pensions and salaries and temporary lay-offs of 30,000 public sector workers.

Some of Prime Minister George Papandreou's ruling Socialist party deputies have threatened not to vote for some of the bill's articles.

With Greece unable to borrow long term on international bond markets to finance its debt, the EU and IMF have stepped in with two bailout packages.

Finance Minister Evangelos Venizelos described the choice as between a "difficult situation and a catastrophe".

"We have to explain to all these indignant people who see their lives changing that what the country is experiencing is not the worst stage of the crisis," he said.

"It is an anguished and necessary effort to avoid the ultimate, deepest and harshest level of the crisis."

Greek haircut

There are fears that if the Greek government defaults on its debts, it will set off a chain reaction that could engulf banks and other highly indebted eurozone nations.

But the government is struggling to convince lenders that it is cutting effectively enough. Greece says it needs the next 8bn euros ($11bn; £7bn) of the first bailout agreed to last year or it will soon be unable to pay its bills.

The details of the second rescue plan have yet to be finalised. Banks have agreed to take a 21% loss, or "haircut", on their loans to Greece but there is growing pressure for them to accept higher losses.

European leaders and global finance chiefs are trying to work out a broader plan to tackle the eurozone's debt crisis ahead of a weekend summit in Brussels.

French President Nicolas Sarkozy flew to Germany late on Wednesday to meet German Chancellor Angela Merkel and senior officials from the European Central Bank and IMF.

Neither leader gave any details about what had been discussed.

The two have disagreed about how Europe's bailout fund, the European Financial Stability Facility (EFSF), can be leveraged from its current 440bn euros to a much higher value in order to bail out banks and struggling countries such as Italy and Spain, if needed.

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