Greek aid payment delayed until mid-November

The European finance ministers have delayed a vital aid payment to Athens until mid-November, setting up a crunch point in the euro zones sovereign debt crisis.Bank shares took a further sharp tumble on Tuesday, leading a broader stock market retreat, after the 17 euro zone ministers, meeting in Luxembourg, called for a review of a July 21 debt swap agreement with private bondholders.The delay in disbursing an 8 billion euro loan instalment, which Greece had said was needed to pay October salaries and pensions, and the revisiting of the private sector deal raised the chance of a Greek default as soon as the currency area has new financial firefighting tools in place, analysts said.The euro hit a nine-month low against the dollar and a 10-year low against the yen.The French and Belgian finance ministers said in a joint statement that Paris and Brussels and their central banks would take all necessary measures to safeguard Dexia account holders and creditors.Jean-Claude Juncker, chairman of the 17-nation Eurogroup, said ministers were reassessing the extent of private sector involvement in a planned 109 billion euro second rescue package for Greece which may now prove insufficient after Athens admitted it would miss key deficit targets.Under the July deal, private creditors agreed to take a 21 percent write-down on their Greek holdings via a plan to lighten and stretch the debt burden, with euro zone governments funding credit enhancements to attract voluntary participation.Now that Greeces economic growth and deficit situation has worsened, that deal needed to be reviewed, Juncker said.Juncker also disappointed analysts by saying the European Central Bank was not the main avenue being explored to increase the firepower of the euro zones rescue fund.The United States has urged the euro zone to leverage its 440 billion euro rescue fund to buy government bonds from the market, recapitalise banks and extend precautionary credit to sovereigns but political resistance to pouring more public money into bailouts is growing across northern Europe.Despite more than six hours of talks, the euro zone meeting produced few concrete steps to tackle the deepening sovereign debt crisis, raising expectations that Greece will end up having to default on its 357 billion euros of debts.