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Greek markets recover losses from Cyprus crisis but doubts renewed over austerity

Shares on the Athens Stock exchange rebounded Wednesday from heavy losses suffered over Cyprus' financial crisis, as a political spat erupted in Greece over whether the government is being too compliant with demands by its own rescue lenders.

Banking stocks rose nearly 5 percent, as the general share index closed up 0.8 percent higher at 930.73.

The market had slumped on Tuesday, with bank share loses nearing 10 percent, in the first trading session since it was announced early Saturday that Cyprus would raid bank deposits to fund its bailout.

Cyprus' parliament later rejected such a confiscation of deposits — touching off a political dispute in Greece, which is struggling to implement harsh austerity measures linked to its own bailout program.

The left-wing opposition in Greece called for the resignation of officials in their country's conservative-led government involved in handling the Cyprus crisis. The government ignored the demand.

"This is a message to our government, which votes 'yes' to everything and has destroyed the country by doing so," Zoe Konstantopoulou, a lawmaker from the left-wing Syriza party, told parliament. "Cyprus has taught you a lesson: that the word 'no' also exists in our vocabulary," he said.

Greece has been surviving for the past three on rescue loans from other eurozone countries and the International Monetary Fund in return for draconian deficit-cutting measures that have hammered public support for the country's mainstream political parties along with its economy — putting nearly 1 million people out of work.

"Cyprus' parliament's decision has exposed the Greek government which advocates that that there are no other alternatives ... And it shows that there is room for negotiation," prominent Syriza lawmaker Rena Dourou, who is on a fact-finding trip to Cyprus, told The Associated Press.

"We have consistently held the view that Europe's crisis is systemic and concerns its integration — and that's how it should be dealt with."

German Chancellor Angela Merkel said she regretted the decision by Cypriot lawmakers to reject the plan to contribute to the bailout package by seizing people's bank savings, but the vote was applauded in Greece.

"Cyprus dares to say no to Germany," the conservative daily Eleftheros Typos headlined, while an opinion poll for private Alpha television found 75.6 percent of Greeks backed the "no" vote in Cyprus.

"Cyprus has shown that it is much better at negotiating than we are in Greece," said Dimitris Mardas, an associate professor of economics at the University of Thessaloniki. "They haven't taken any unilateral action, but they are looking for a better outcome. So politicians here could learn something from them."

Greek government officials argued that Greece's bailout packages worth €240 billion ($310.7 billion) could not be compared with that proposed for Cyprus, worth some €10 billion ($12.9 billion).

"The causes of the crisis in Cyprus and the crisis in Greece are not the same," said Greek government spokesman Simos Kedikoglou. "We must be realistic and look for solutions. Politics — it must be remembered — is the art of the possible."