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Greek Prime Minister George Papandreou Faces Critical Confidence Vote

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By DEREK GATOPOULOS, The Associated Press

ATHENS, Greece (AP) -- Greece's prime minister has survived a confidence vote in parliament, calming a revolt in his Socialist party with a pledge to seek an interim government that would secure a vital new European debt deal.

Socialist lawmakers backed the embattled government of George Papandreou in the vote that ended early Saturday. An AP count showed Papandreou won with 153 votes in the 300-member Parliament.

Papandreou's government came under threat this week, following his disastrous bid to hold a referendum on a major new European debt agreement. The idea was swiftly scrapped Thursday after an angry response from markets and European leaders.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

ATHENS, Greece (AP) - Greece's embattled prime minister promised late Friday to start immediate powersharing talks to form a caretaker coalition government amid the debt crisis, declaring his willingness to step aside if needed.

But George Papandreou ruled out snap elections, saying they would be a catastrophe that would scuttle a major new European debt deal reached just last week.

Papandreou made the pledge moments before lawmakers started casting ballots in a critical confidence vote in his troubled two-year Socialist government. The 59-year-old had been fighting an open revolt from his own Socialist deputies sparked by his surprise announcement earlier this week that he would put the new debt deal to a referendum.

He was forced to withdraw the referendum plan Thursday after markets and European Union leaders reacted with hostility to the idea, and his lawmakers and ministers rebelled and called for him to step down, accusing him of endangering the country's bailout.

With a majority of just two seats in the 300-member parliament and several Socialist lawmakers saying openly they had not decided which way they would vote, it was far from certain that the pledge to seek a coalition government would persuade enough lawmakers to back Papandreou.

The prime minister said he would visit the country's president Saturday to launch powersharing talks "with the (opposition) parties ... for the formation of a government of broad cooperation."

A week of unending drama in Athens has horrified its European partners, spooked global markets and overshadowed the Group of 20 summit in the French resort of Cannes. The threat of a Greek default or exit from the common euro currency has worsened the continent's debt crisis, which is already struggling under bailouts for Greece, Ireland and Portugal.

"We, the Socialist party deputies, carried the cross of reform ... But one group in parliament is not enough. This great task requires sincere and broad support," Papandreou said, stressing the transition must be as smooth as possible.

"The priority is the security of the country - continued (rescue) funding, adhering to the debt deal and our continued presence in the euro, and all other initiatives need to avoid danger for the nation."

Papandreou said his main interest was to stabilize the country's economy, and he was open to negotiation as to who would lead the new government.

"We must proceed in an organized way. And regardless of developments, the country must be governed tomorrow without turbulence," he said.

"I seek the vote of confidence tonight to safeguard a steady course for the country - with no power vacuum, without being dragged to election."

Finance Minister Evangelos Venizelos said the country faced a "mortal danger," and the new government would focus on safeguarding the new debt deal and ensuring Greece received the next vital euro8 billion ($11 billion) installment of its existing euro110 billion bailout.

European leaders had summoned Papandreou to Cannes on the sidelines of the G-20 meeting after he announced the referendum, and had said that if such a vote was held, they would hold back the next bailout installment until it was over.

Greece faces bankruptcy within weeks without the funds.

The new debt deal would give Greece a euro130 billion ($179 billion) rescue package - on top of the euro110 billion ($152 billion) it was granted a year ago. It would also see banks write off 50 percent of the money Greece owes them, about euro100 billion ($138 billion). The goal is to reduce Greece's debts to the point where the country is able to handle its finances without relying on constant bailouts.

If the deal stalls, Greece will not get the next euro8 billion ($11 billion) installment of its loans and would probably go bankrupt before Christmas.

Polls indicate the Greek public is close to the breaking point after more than 20 months of harsh austerity cuts and tax hikes. Near-daily strikes and protests have often degenerated into riots. Recent opinion surveys show 90 percent of Greeks oppose Papandreou's policies and his party has just 20 percent public support.

Outside parliament, an estimated 7,000 protesters held an anti-government rally Friday.

The Socialists have mostly shouldered the blame alone for their austerity measures, but the conservatives also have culpability in the financial debacle. The Socialists came to power in a 2009 landslide and immediately discovered that, under the ousted conservatives, Greece had falsified some of its financial data for years.

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