* Syriza demands early elections, say on policy decisions
* Markets rise on relief govt not in danger of collapse
* Snap election possible before presidential vote early 2015
(New story with politicians' quotes, government and EU
By Karolina Tagaris and Deepa Babington
ATHENS, May 26 Greece's ruling coalition will
find it harder to push through unpopular reforms demanded under
an EU/IMF bailout after a clear EU election victory by the
radical leftist Syriza party.
Syriza's win by nearly four points fell short of the margin
needed to threaten Prime Minister Antonis Samaras's government,
and financial markets rose on relief the pro-bailout coalition
will be in place to negotiate debt relief talks later this year.
But an emboldened Syriza has promised to make life even more
difficult for a fragile right-left coalition hanging on to a
slim two-seat majority in the 300-seat parliament.
In an early sign of the troubles ahead, Syriza leader Alexis
Tsipras demanded early elections, declared parliament had lost
its legitimacy and said Samaras should get his consent before
appointing the next governor of the Bank of Greece in June.
"This parliament has no legitimate right to make crucial
decisions which will bind the country and the people for the
following years," Tsipras told reporters after meeting Greece's
president on Monday to discuss his election win.
"We must go to national elections as soon as possible in a
coordinated and normal way for democracy to be restored."
Greece still needs to push through pension and other reforms
to be eligible for the final aid payments under its EU/IMF
bailout which expires this year and to position itself ahead of
debt relief talks.
Syriza also bagged the post of governor of the wider Athens
region in local elections, allowing it to have a say in some key
privatisations, which it opposes.
"This is a victory for the unemployed citizens, for the
pensioners," Syriza's Rena Dourou, elected governor of the
greater Athens region, told Greek TV. "One could say this is a
victory of David over Goliath".
Samaras has softened his pro-bailout message in recent
months while urging Greeks to stick it out as the country
returns to economic growth after a six-year recession this year.
Against this backdrop, European lenders may be more lenient
with Greece during autumn talks to reduce the country's debt
burden, to avoid further endangering Samaras's government, a
European official familiar with Greek bailout talks said.
"The election's outcome may soften lenders' stance in the
debt relief talks," the official said.
The Athens stock market rose 1.5 percent and Greek 10-year
bond yields fell 28 basis points on Monday, heading for its
biggest daily fall in a month.
With 99 percent of the vote counted, Syriza had 26.6 percent
of the vote to become the first radical leftist party to win at
the national level in modern Greece, ahead of Samaras's New
Democracy conservatives who took 22.7 percent.
"This is a historic win," Tsipras told flag-waving
supporters in the early hours of Monday. "Today, the whole of
Europe is talking about Greece because it condemned austerity."
The coalition of New Democracy and PASOK combined won a
bigger share of the vote than Syriza, which analysts said
averted the possibility of early elections until a presidential
election in early 2015 muddies the political landscape again.
Greek law says parliament must be dissolved if no
presidential candidate secures 180 parliamentary votes - a level
of backing that Samaras does not have.
Analysts say if Samaras is unable to find alliances to elect
a new president, then he may opt to call snap elections as early
as later this year to cash in on a boost in Greece's economic
"The election result doesn't clear the horizon around the
presidential election in spring," the European official said.
"This creates uncertainty and might hurt Greece-bound
For now, Samaras is expected to reshuffle his cabinet
following the election defeat, with the focus on whether Finance
Minister Yannis Stournaras keeps his post or heads to the Bank
of Greece as governor, government officials said.
"The reshuffle won't be immediate, it won't happen in the
coming days or this week," said one official, who declined to be
(Additional reporting by Harry Papachristou, George
Georgiopoulos, Angeliki Koutantou and Renee Maltezou. Writing by
Deepa Babington, editing by Mike Peacock)