Early Greece vote spurs historic plunge

Greek stocks have seen their biggest one-day drop in nearly three decades after the government unexpectedly brought forward a high-stakes presidential vote.

The vote by 300 members of parliament to replace President Karolos Papoulias was due in February but a first round has now been set for December 17.

The election is a key test for embattled Prime Minister Antonis Samaras, who would be forced to call snap general elections if his candidate - former EU Environment Commissioner Stavros Dimas - fails to garner enough support.

The prime minister said he had brought forward the election to clear "clouds of political instability in Greece and political uncertainty over Greece abroad".

He added that Dimas, 73, is "respected by the international community" and his election would enable Greece to "officially enter the post-bailout era".

But news of the early vote sent stocks plunging, with losses accelerating after Dimas was formally named as the government's candidate.

The Athens overall index closed down 12.78 per cent to 902.84 points on Tuesday, the largest one-day drop since 1987. It had fallen by as much as 13.15 per cent earlier in the day.

European stocks also slumped, and the yields on German 10-year bonds - a safe-haven asset - fell to a new record low.

Analysts warned that the political uncertainty could stall Greece's fiscal reforms which are required under the terms of a 240 billion euros ($A360 billion) bailout package accorded by the European Union and the International Monetary Fund.

Greece is only gingerly creeping out of a debilitating recession that lasted six years and which left about a fifth of the population unemployed.

Tensions are still running high with many Greeks fed up with years of austerity, and Athens is still locked in negotiations with its creditors for the final tranche of EU aid funds.