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Greek PM Papandreou calls off the referendum, but Friday's confidence vote still on.
Update: Reuters has reported that government sources said Papandreou has struck a deal to step down if it will help him win the confidence vote on Friday.
Ministers involved in the deal included Finance Minister Evangelos Venizelos, sources said, according to Reuters. Another minister at the meeting said Papandreou forged the deal with the opposition party and admitted he made a mistake by calling for a referendum on Monday.
"Venizelos told him he must make a graceful exit both for his sake and for the party's sake and that the ministers would help him do it," Reuters' source from the cabinet meeting said. "This is provided he survives the confidence vote, which is not at all certain."
Greek Prime Minister George Papandreou's announcement that he would call off a referendum was greeted with a sigh of relief from European and American markets, which soared Thursday afternoon in response. But the leader of the opposition party is still calling for Papandreou's resignation.
The referendum, which would target Greece's new bailout plan, averted a political showdown, USA Today reports. Friday night's vote of confidence will still go ahead as planned.
Papandreou, who has been under pressure to resign, said he wants his opposition to join in on negotiations concerning the loan deal, The New York Times reported. He also said he would assign the task of discussions with the opposition to two senior party members, Reuters reported.
Antonis Samaras, head of the conservative New Democracy party, renewed his call for Papandreou's resignation, telling parliament he felt that if a transitional government was put into place, it should have a short-term duration, the Wall Street Journal reported. He is also calling for elections to be held as soon as possible, such as in the next six weeks.
"If he thinks I want to govern together with him, he understood wrong. If he thinks I want to share ministries with him, he understood wrong," Samaras said, WSJ reported. "No, Mr. Papandreou, you must resign and hold elections so the Greek people can elect a new prime minister."
After the cabinet talks, Papandreou reportedly accepted an opposition proposal to form a temporary transitional government, Bloomberg BusinessWeek reported. The transitional government would secure the approval of Europe's latest bailout plan by pushing it through parliament, the Los Angeles Times reported.
Most importantly, a switch to transitional government would mean Papandreou would step down. According to the LA Times, Anna Diamantopoulou, the Greek education minister, said Papandreou was prepared to accept the proposal from Samaras, for a unity government.
News of Papandreou calling off the referendum caused European markets to soar and the euro rose versus the dollar and yen, Bloomberg reported. Wall Street also rallied, with the Dow Jones average gaining over 300 points, after Papandreou's announcement, along with the European Central Bank cutting the interest rate to 1.25 percent, Reuters reported.
In his speech, which many criticized as “rambling,” Papandreou praised senior party members for their support of the bailout deal and then called off the need for a referendum.
England’s Daily Telegraph’s live blog said Papandreou seemed to be “sending slightly mixed messages here. His speech was rambling and lacking in a firm answer on whether or not we can expect a Greek referendum.”
"I will be glad even if we don't go to a referendum, which was never a purpose in itself. I'm glad that all this discussion has at least brought a lot of people back to their senses," Papandreou said, Reuters reported.
Papandreou also repeated in his speech that Greece will not leave the euro zone. According to The Telegraph, Greek finance minister Evangelos Venizelos reportedly also said there will not be a referendum.
Throughout Thursday morning, reports of Papandreou calling off the referendum have been circulating.
"Papandreou has taken a step back and said he won't hold the referendum," said Kostas Yeitonas, a veteran member of Papandreou's party, PASOK, to Mega TV.
According to Yeitonas, Samaras has also agreed to support the rescue package, "which is a very good one for us, in parliament. He, too, has taken a step back."
Samaras, had previously slammed the debt deal as it would condemn Greece to deeper recession.
Read more at GlobalPost: VIDEO: Greeks express outrage on debt crisis