Eurozone hit by Greek restructuring worry

Greek borrowing costs surged to new highs on Thursday and pressure rose on other financially weak eurozone countries after Germany suggested for the first time that Athens may need to restructure its massive debt load.
Central bankers and European Union officials warned a restructuring would lead to economic "catastrophe" for Greece and the government vowed to deliver on the ambitious fiscal goals set out for it by the EU and International Monetary Fund in last year's 110 billion euro ($160 billion) rescue.
But doubts are growing that Greece will achieve those targets in time to return to the capital markets for funding next year, stoking fears that the European debt crisis that has raged since late 2009 could be entering a new viral phase.
With a debt mountain that is expected to approach 160 percent of annual output by 2013 and EU/IMF money due to run out that same year, some move to reduce Greece's debt burden such as reducing or postponing repayments to its bond investors looks increasingly unavoidable. A Reuters poll on Thursday showed analysts believe there is a 60 percent chance Greece will have to restructure its debt in the next few years. They put the chances for Ireland at 40 percent and Portugal at 30 percent.