ATHENS - Thousands of Greek civil servants marched through Athens during a 24-hour strike on Wednesday which shut schools and grounded flights, testing government resolve to tackle a debt crisis which has shaken the euro zone.
Riot police briefly fired teargas at dozens of demonstrators who tried to break a security cordon in central Athens but the protests were mostly peaceful, in a positive sign for investors and EU policymakers who are closely watching the strike.
Financial markets rallied on Wednesday amid talk that the European Union could bail out Greece, but Brussels has repeatedly said the socialist government must stand firm on wage cuts and tax rises in the face of union opposition.
Some 5,000 members of the ADEDY public sector union marched through rain to parliament waving banners reading We won't pay for the crisis. The 500,000-strong union wants the government to scrap emergency measures including a wage and pension freeze.
These measures are unjust and we will continue our struggle as long as the government does not change its policies, ADEDY General Secretary Ilias Iliopoulos said, adding that his union would almost certainly join a private sector strike on February 24.
Iliopoulos said 70 percent of members joined the stoppage, but many public employees appeared at ministries and schools. The government was due to release estimates later.
Many ordinary people, however, said it was too soon to dismiss efforts by Prime Minister George Papandreou, a scion of a political dynasty who won power last year, to pull Greece's finances back from the brink after years of mismanagement.
I'm afraid low earners will be hurt but we must be patient and if the measures don't work, then people have the right to react massively, said Maria Pipikari, 29, a shipping employee.
FUNDING COVERED TIL APRIL
The spread of Greek bonds over benchmark German Bunds tightened to its narrowest since January 20 as investors welcomed reports of intense EU negotiations over bilateral aid from member states for Greece.
Greece needs to borrow 53 billion euros this year. It has covered its needs until April, but then has a heavy schedule of payments of up to 20 billion euros by end-June. Analysts warn that if it runs out of money to pay state wages and pensions, the backlash will be ferocious.
Memories still linger of weeks of violent demonstrations in December 2008, fueled by anger at unemployment and corruption.
While no violence was expected during Wednesday's stoppage, it was seen as just the first in a series of union protests whose severity would depend on Papandreou's success in restoring faith in the economy, which he says will grow this year.
The prime minister didn't keep his promises and he is dipping his hands in the pockets of the poor, said Eleni Papapostolou, 46, a teacher and mother of two. I have to cut out coffee just to get by. Ordinary people have debts too.
The public sector strike comes a day after the government unveiled measures to cut its budget deficit below the EU ceiling of 3 percent of GDP by 2012, from 12.7 percent last year -- the highest in the 16 nation euro zone.
Unions opposed the proposals to freeze public wages, slash the salary supplements many Greeks get on top of their basic pay, and replace only one in five of the people leaving the civil service.
Weekend opinion polls showed that for the time being most Greeks back the government. It also appeared to have faced down a protest by farmers blocking highways and a border crossing with Bulgaria, as the demonstration dwindled to the last few people.
Air traffic controllers canceled all non-emergency flights, and main ports were shut down.