Talks to form Greek government collapse Greece was heading for a fresh general election after political leaders on Tuesday failed to agree on a proposal by the country's president to form a technocratic government with a limited mandate. "Unfortunately the country is on the road to elections under very negative conditions," said Evangelos Venizelos, leader of the Panhellenic Socialist Movement (Pasok), after a two-hour meeting of five leaders. A statement by President Karolos Papoulias, who chaired three failed meetings in as many days in an attempt to form a government of respected personalities and technocrats, said the latest gathering ended without agreement. The leaders would convene again on Wednesday to form a caretaker government to oversee another election, probably on June 17, the statement added. The news came amid mounting gloom over the possibility that prolonged instability could push Greece nearer to an exit from eurozone. News of the failure of the talks sent the euro sharply lower, breaking below $1.28 against the US dollar for the first time since January. Other European currencies were also affected by contagion fears: the Swedish krona hit its weakest level against the dollar since September 2010, while even sterling, regarded as a relative haven in Europe in recent weeks, sold off against the greenback to reach its lowest level in nearly a month. The yield on German government Bunds fell sharply but borrowing costs on Italian 10-year sovereign bonds hit 6 per cent for the first time since the end of January, while the equivalent yields on Spanish bonds rose 11 basis points to 6.36 per cent. Opinion polls showed that the radical leftwing coalition Syriza would boost its share of the vote and take first place if another poll were held in June, but it would still fall short of an overall majority. Alexis Tsipras, Syriza leader, attended the meeting although his party opposes further austerity measures that a broad-based coalition government would be expected to implement in line with the country's second €174bn bailout by the EU and International Monetary Fund. "We are standing by our position - no bailout policies," a Syriza spokesman said. Apart from Mr Tsipras and Mr Venizelos, Antonis Samaras, leader of the centre-right New Democracy party, Fotis Kouvelis of the Democratic Left, and Panos Kammenos, leader of Independent Greeks, a rightwing splinter group, were also there. The Greek Communist party refused to participate while Golden Dawn, a neo-fascist party that won seats in parliament for the first time in the May 6 election, was not invited, according to a presidential aide. Meanwhile, Greece is set to repay fully a €450m bond that matures on Tuesday after failing to reach a deal with holdout investors, including private banks and a US-based hedge fund.