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Greece's auction of Treasury bills drew stronger demand than at a previous sale as yields more than doubled in the first offering of debt since the nation won a pledge of aid from the European Union.

The government sold 780 million euros of 26-week bills at a yield of 4.55 per cent, attracting bids for 7.67 times the securities offered, the nation's Public Debt Management Agency said on Tuesday in Athens. Greece also offered 780 million euros of 52-week securities at a yield of 4.85 per cent, with a bid-to-cover ratio of 6.54 times. In January, the 52-week bills were sold to yield 2.2 per cent.

According to Bloomberg News on Tuesday, Euro-region finance ministers and the International Monetary Fund offered the country as much as 45 billion euros in loans two days ago. Greek two-year notes rose for a third day earlier today and the euro gained against the dollar as the lifeline boosted confidence the government would avoid a default.

'The result confirms that the package which was put in place on Sunday has enabled Greece to fund itself in the near- term,' Chief European Financial Economist at Jefferies International Limited. in London, Mr. David Owen said. 'But the longer-term fundamental issues in terms of where we go from here haven't changed. Greece has to put its finances in order against the backdrop of an economy that currently is shrinking,' he added.

Prime Minister George Papandreou needs to raise 11.6 billion euros by the end of May to cover maturing debt, with another 20 billion euros required by year-end to pay interest and finance this year's deficit. Last week, the government estimated its 2009 budget shortfall to be 12.9 per cent of GDP, the biggest in the euro's history and more than four times the EU's three per cent limit. The previous forecast was 12.7 per cent.

Greece provided an option at Tuesday's auction for investors to buy an extra 30 per cent of the bills at an average price, which was used by buyers, raising the amount sold to 1.56 billion euros from the 1.2 billion euros initially earmarked.

'Many investors used the 30 per cent option, which is a good signal,' Luca Cazzulani, a fixed-income strategist at UniCredit SpA, one of the 22 primary dealers of Greek debt, said.

Selling short-term bills 'is not the issue,' said Stuart Thomson, who helps oversee more than $100bn as chief market economist at Ignis Asset Management in Glasgow, Scotland, said. 'It's whether they can sell medium-term paper and whether they can sell enough of it. Greece will eventually be forced into a partial default,' he added.