By George Georgiopoulos and Renee Maltezou
ATHENS (Reuters) - Greece's two mainstream parties rejected a coalition led by radical leftist Alexis Tsipras, forcing the country closer to having to re-run Sunday's inconclusive election that saw voters overwhelmingly reject its EU/IMF bailout.
The election, in which Greeks vented rage over economic hardship and deserted the mainstream parties that negotiated the bailout, left an intractable political deadlock and triggered threats from Europe to eject Greece from the euro.
The conservative New Democracy and Socialist PASOK parties, which between them dominated Greek politics for decades and jointly negotiated last year's 130 billion euro bailout, received less than a third of votes and fell two seats short of a majority needed to form a government.
After New Democracy leader Antonis Samaras failed to form a government, that task fell to Tsipras, whose far-left party placed second in Sunday's vote, ahead of PASOK.
Tsipras has called for the bailout package to be torn up, and his overtures were spurned as expected by Samaras and PASOK leader Evangelos Venizelos.
"Mr Tsipras ... asks me to accept Greece's exit from the euro and the country's bankruptcy. This is something I will not do," Samaras said after meeting Tsipras.
Venizelos, who will be next in line for a chance to form a government if Tsipras gives up, said no deal was possible now but he would continue the search for a coalition when his turn comes.
Tsipras is expected to give up on Thursday. Venizelos would then have three days, and if he fails the new election would be announced next week and probably held in early-mid June.
"At the current stage we cannot reach a deal, but we must continue the effort," Venizelos said. "I will get the mandate and will continue the effort. We must form a government and give the country prospects for the future, hope and security."
European leaders piled the pressure on Greece to stick to the 130 billion euro bailout, making clear that failure to do so would lead to an exit from the single currency.
Angela Merkel, leader of euro zone paymaster Germany, said in a newspaper interview that she wanted Greece to stay in the common currency but it must stick to the terms of the bailout.
Polls show a vast majority of Greeks want to keep the euro currency - widely seen as impossible without the bailout - but are furious with the two mainstream political parties they blame for the recession, record unemployment and endemic corruption.
Most believe cuts demanded by the EU and International Monetary Fund are only making the situation worse by increasing unemployment and preventing economic recovery.
TSIPRAS CONDEMNED
Samaras said earlier Tsipras's rejection of the bailout would drive Greece out of the euro and called on him to "come to his senses."
Samaras added: "The Greek people did not give a mandate for the country to collapse or exit the euro zone. The exact opposite."
Tsipras, 37, refused to budge, saying coalition talks with the mainstream parties would only have meaning if Samaras and Venizelos agreed to revoke "barbaric austerity measures".
In a speech to trade unions and employers as part of his coalition talks, Tsipras added: "If the euro and the eurozone is threatened, it is threatened because of the austerity measures which were first applied in this country, as it was chosen to serve as a guinea pig."
Tsipras aides said he would send a letter to European Central Bank chief Mario Draghi, European Commission head Jose Manuel Barroso and EU Council President Herman von Rompuy on Wednesday saying that the rescue deal - the only thing keeping Greece from bankruptcy - was no longer binding because Greeks had voted against it.
He has also asked to meet French president-elect Francois Hollande, aides said. Analysts say the success of Hollande, who wants to challenge German-led austerity policies in Europe, had encouraged Greeks to vote against the bailout.
Greek newspapers attacked politicians for playing dangerous games and said elections loomed.
Many Greeks seemed unfazed by the crisis created by the election, but some expressed alarm.
"People voted with anger not with reason," said 51-year-old widow Maria Savelona. "Tsipras lives in his own world. God help us, what is this? I'm afraid we will be kicked out of the euro and he thinks he is our saviour?"
Investment bank J.P. Morgan said in a note that if support returned to PASOK and New Democracy in a new poll, Greece might stay in the euro, with possible modifications to the bailout deal. Otherwise "exit from the Euro area will become very likely."
Megan Greene, senior economist at Roubini Global Economics, said that even if a pro-bailout coalition could be formed after a second election it would be weak and face extreme hostility from other parties in trying to meet austerity targets.
"A pro-bailout coalition could therefore provide a solution that might last for months, not years," she said.
Greece's crisis, and the prospect that it could revive the debt crisis that spread through the euro zone, helped drive the euro towards a three-month low and pushed down global shares.
Greek finance ministry officials have warned the country might run out of cash by the end of June if it does not have a government in place to negotiate a next aid tranche.
EU, IMF and ECB chief inspectors, collectively known as the "troika", will wait for a new government to be in place before coming for an inspection visit and making any decision on releasing more aid.
A key condition for more aid is to agree to more than 11 billion euros in extra spending cuts for 2013-2014 by June.
