Greece has appealed for emergency loans in the first financial rescue of a member of the euro zone.

Prime Minister George Papandreou asked for 45 billion euros (£39 billion) from EU partners and the IMF after investors feared a default and pushed borrowing costs to record levels, undermining Athens' efforts to cut its 300 billion euro debt mountain.

European markets rallied on the announcement but fell back as investors said the long-awaited bailout, which could be the largest multilateral rescue of a country ever tried, would bring only short-term relief.

There were concerns it could force harsher austerity on Greece, deepening its recession, and that it would set a precedent for other euro zone underperformers.

Greek riot police fired teargas on Friday at leftwing protesters marching through central Athens against austerity measures.

The main Greek public sector union brought nurses, teachers and other public service workers onto the streets of the Greek capital.