Hole in Greek finances bigger than thought as bond flight continues and other countries crumble -- Eurozone may be headed toward financial collapse

Fears that struggling eurozone nations will not be able to pay their debts intensified as official data showed the hole in Greece's finances was bigger than thought.

The deficit in the Greek government's budget amounted to 10.5pc of GDP in 2010, EU statistics agency Eurostat reported on Tuesday, putting it significantly above February's 9.6pc estimate from Brussels.

The continued flight from Greek sovereign debt pushed the yield, or return, on the 10-year government bonds to new highs of 15.5pc.

The European Central Bank, the only major potential buyer, "won't buy whilst [some eurozone countries such as Germany] continue to speak and put pressure on Greece to restructure", said one trader.

A restructure of Greek debt, cutting the interest rates and lengthening the terms of the loans, would represent an effective default as the debt would be worth much less.

In late 2009 a more dramatic revision of Greece's deficit sparked Europe's debt crisis as it ignited fears about the state of weaker eurozone nations' finances, eventually leading to Athens last year receiving a €110bn (£98bn) bail-out. Ireland and Portugal have since followed in requesting international aid. (read more)