CDS REACH RECORD LEVEL Greece - 98% chance of default

• Angela Merkel says she won"t allow Greece to enter into an "uncontrolled default"

• Italy sold bonds at a record yield

• Italian government looking for China"s aid

Greece has 98% chances of defaulting in the next five year, if Greek prime-minister George Papandreou fails to assure investors that the country can survive the Eurozone debt crisis, Bloomberg says.

Peter Tchir, founder of speculative "TF Market Advisors" of New York, says: "Everyone expects Greece to default in the near future and I think that this will be a harsh event. It is clear that the country"s austerity program isn"t working".

According to data from CMA, the cost of insuring against the Greek risk of default for a five year, 10 million dollars loan (CDS) yesterday reached a new record high, of 5.8 million dollars and an additional 100,000 dollars a year. The previous record high, of 5.5 million dollars, was reached on Friday.

The promises of the Greek government and of the PM George Papandreou to comply with the goals that it needs to meet to receive the foreign loan agreed with the IMF and the EU lost their credibility, after a recent mission of the inspectors of the international financial institutions visiting Athens found that Greece"s budget deficit increased 22% in the first eight months of the year.

The Greek government estimates that the country"s economy will fall more than 5% this year, compared to a decline of 3.8% anticipated by the European Commission.

• Merkel: "Greece"s exit from the Eurozone must be avoided at all costs"

German chancellor Angela Merkel said she will not allow Greece to enter "an uncontrolled default", as European leaders try to minimize the risk the country"s problems spreading to others states in the Eurozone.

According to the statements of the German official, Europe is doing its best to avoid going into default and warned that Greece"s exit from the Eurozone would have a "domino effect".

Merkel said: "We are using all the tools we have at our disposal to prevent something like that from happening. We need to avoid any process that would disrupt the Euro".

• Italy sold government bonds worth 6.5 billion Euros

The Italian Treasury yesterday announced that it raised almost 6.5 billion Euros (8.8 billion dollars) from the market by selling bonds, but did so at a record yield. The Italian government sold 5-year bonds worth 3.9 billion Euros, at a yield of 5.6%, as opposed to 4.93% in the previous auction, which was held on July 14th. Demand for these bonds exceeded the offer 1.28 times.

The treasury also sold bonds worth 2.6 billion Euros with 2018 and 2020 maturities.

It bears mentioning that yesterday, American newspaper Wall Street Journal wrote that the center-right Italian government is turning its eyes to China, in the hope that Beijing will help rescue the country from the financial crisis, through "significant" acquisitions of Italian bonds and by investing in strategic companies. Lou Jiwei, the chairman of "China Investment" Corp., one of the largest sovereign funds in the world, last week led a mission which visited Rome, in order to hold talks with finance minister Giulio Tremonti and "Cassa Italia Depositi e Prestiti" - an entity controlled by the state, which created an Italian strategic fund open to foreign investors.

Prime Minister Silvio Berlusconi announced that the 54 billion Euros austerity plan prepared by the government will be voted today by the Parliament, and promised to identify other measures that would support economic growth as well.

On the other hand, the Italian government is considering the sale of state assets worth 500 billion Euros, to reduce its massive public debt, according to sources quoted by Il Sole 24 Ore.

"Next week at the latest there will be a meeting with investors in Rome, to review the options available to government", sources said, which stressed that companies such as "Eni" and "Enel" are not targeted.