Greece's borrowing costs spiked on Thursday amid renewed market jitters over its ballooning public deficit, but the government said it was confident it could meet its financing needs. Greek bond spreads over benchmark German Bunds briefly hit a record level since the country joined the euro on worries about Athens' fiscal health, traders said.

They had narrowed after the Brussels weekly newspaper European Voice reported that EU officials were exploring the possibility of a heavilly-conditioned loan to Athens A European Commission spokeswoman later said she was not aware of any such talks and the German Finance Ministry said Greece must solve its fiscal problems through its own efforts.

The premium demanded by investors to buy 10-year Greek bonds rose as high as 311 basis points above Bunds, and fell as low as 276 bps before settling around 290 bps at 1400 GMT. The sharp swings highlighted nervousness over financial risks in debt-laden countries such as Greece and Dubai hit by the global credit crisis. But Greece's finance minister and debt agency chief sounded upbeat about the country's ability to ride out the fiscal storm.

Copyright Business Recorder, 2010