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Despite Greece's 2011 austerity budget, a financial chill deepens in Europe

Greece passed a budget early Thursday with deep spending cuts, but investors will probably remain leery of lending to Greece and some of its indebted European peers.

Protesters gather during a rally in Athens, Wednesday, Dec. 22. Greek unions are stepping up protests against the government's tough austerity program, leaving Athens without public transport ahead of a crucial budget vote.

Alkis Konstantinidis/AP

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As an unseasonable freeze settles over much of Europe, even the Continent's balmier southern climates are suffering. But their freeze relates to cash, not the cold.

Greece, the longest suffering of Europe's so-called PIGS – Portugal, Ireland, Italy, Greece, and Spain – approved an austere 2011 budget early Thursday that's in line with conditions imposed on it in exchange for a European Union and International Monetary Fund (IMF) bailout.

The budget aims to reduce the annual Greek deficit to 7.4 percent of gross domestic product (GDP) from the current level of 9.4 percent. Greek officials say they're taking control of matters, and that markets will soon start to recognize it.

Perhaps. But despite bailouts for Greece and Ireland and efforts to trim public debt in Spain and Portugal to stave off a financial implosion, EU moves to stabilize the weaker EU economies are doing little to satisfy investors.

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