Protesters began massing outside parliament as the day began and groups of workers assembled at rallying points throughout the capital before a mass demonstration later in the day.
Beleaguered Prime Minister George Papandreou has appealed for support from Greeks ahead of a vote later on Wednesday on tax hikes, wage cuts and layoffs demanded by international lenders who have been pressing Athens for tougher action.
Unions who have called a general strike to coincide with the vote say they expect one of the biggest labor actions in the two years since the start of Greece's financial crisis, which now threatens to spread across Europe's single currency zone.
The mood was hostile among the protesters. Unions, the opposition and some economists say repeated cuts will only drive Greece's stricken economy further into recession. Many called for the downfall of Papandreou's Socialist government.
"We want them out because they can only bring us misery. They are squeezing people dry," said Dina Kolovou, a 46 year-old municipal worker. "This is going to be a huge protest."
The 48-hour strike will shut down government departments, businesses, public services and even providers of everyday staples like shops and bakeries. Some 150 domestic and international flights were canceled.
Authorities said 5,000 police were deployed in Athens, with another 2,000 held in reserve.
Greece has seen violent clashes during demonstrations throughout the crisis, culminating in June with two days of running battles between rioters and police when Syntagma Square outside parliament was cloaked in clouds of teargas.
"THERE WILL BE WAR"
"With these measures they are killing us slowly. There will be war today and I am going to take part," said 75-year old private sector pensioner Dimitris Panagiotopoulos.
As the first groups began to arrive, thousands of students and young communists gathered in front of parliament, carrying banners with slogans such as "Power to the People" and "The government must fall now."
Apart from the protests, the streets of central Athens were eerily quiet with posters reading "We are shutting down for the day so that we don't shut down forever," plastered over shuttered storefronts.
Trapped in the third year of deep recession and strangled by a public debt amounting to 162 percent of gross domestic product which few now believe can be paid back, Greece has sunk deeper into crisis, despite repeated doses of austerity.
Wednesday's action comes as European Union leaders scramble to set the outlines of a new rescue package in time for a summit on Sunday that hopes to agree measures to protect the region's financial system from a potential Greek debt default.
Speaking to PASOK deputies late on Tuesday, Papandreou compared the situation facing Greece to a war and told his party it had a duty to support the painful new cuts, despite the opposition from the streets.
"We must persevere in this war as people, as a government, as a parliamentary group in order for the country to win it," Papandreou said. "We will win for the country, we will persevere. That is why I'm here."
A first vote, on the overall bill, will be held on Wednesday night, with a second vote on specific articles expected some time on Thursday.
Papandreou's narrow four-seat majority is expected to be enough to ensure the bill goes through, especially given possible support from a smaller opposition group. But party discipline has come under increasing strain and one PASOK deputy resigned his seat in protest on Monday.
At least two others have also threatened to vote against part of the package dealing with collective wage bargaining agreements.
The austerity package mixes deep cuts to public sector pay and pensions, tax hikes, a suspension of sectoral pay accords and an end to the constitutional taboo against laying off civil servants.
"None of my colleagues - who have been through a lot lately -- will risk letting the country fall from our hands and break, go bankrupt," Development Minister Mihalis Chrysohoidis told Mega TV on Wednesday, saying parliament would pass the bill.
International lenders, who are providing the funds Athens needs to stay afloat after it was shut out of bond markets last year, have expressed impatience at the slow pace of reform as Greece has slipped behind on its budget targets.
There has been growing talk that Athens should be placed under tighter supervision by EU authorities to ensure it meets its reform obligations.
Squeezed between escalating popular protests against the cuts already imposed and demands from the EU and International Monetary Fund for even tougher action, Papandreou's support has appeared increasingly uncertain.
Although the government has repeatedly ruled out early elections, many political analysts now believe that a snap ballot will probably be held some time in the coming months.
http://www.reuters.com/article/2011/10/19/us-greece-idUSTRE79H1FI20111019
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