Yesterdays surge in Greek bond yields has added pressure on the nation’s government to activate an EU bailout and accept more spending cuts as the country’s civil servants held a one day strike today to protest against government cutbacks.

The euro continued to fall against both the US dollar and sterling for the fourth day today. Yesterday the single currency dropped 0.66% against the pound closing at GBP 0.86861. Today it touched a low of GBP 0.86547 in trading on the Forex market. The euro fell 0.35% against the US dollar yesterday, closing at EUR 1.33870. Today it touched a low of EUR 1.33302 against the dollar.

Greece’s benchmark 10-year bond yield soared to 8.13% yesterday, its highest level since the single currency was introduced in 1998 and more than double the comparable German rate. Rates rose as it became clear that talks about the aid package would not be finished until days before Greece is due to repay a multi-billion euro loan.

Greece’s finance ministry said the talks with the European Commission and the IMF would take about two weeks, with a joint statement to be issued on around May 15th. On May 19th, Greece is due to repay investors an 8.5 billion euro bond.

Today’s strike, the fourth of its kind this year has forced hospitals and schools to close as well as affecting government ministries. Prime Minister George Papandreou is being criticized by voters who believe the austerity measures his government has enacted are excessive and by investors who believe more measures should still be enacted to cut a budget deficit in excess of 12% of GDP, the largest in the euro zone.

The Greek government said it still plans to cut the deficit by four percentage points this year, though it backed away from a forecast that the shortfall would fall to 8.7%. An EU official said the bloc has always aimed for a four percentage point cut in the budget gap this year. While Finance Minister George Papaconstantinou says he’s “not influenced” by the surge in bond yields, investors are skeptical he can maintain momentum to cut the budget shortfall to less than 3% in 2012.

Euro zone partners have agreed to offer a rescue package of up to 30 billion euro with another 10 billion euro to come from the IMF. However speculation persists that even 40 billion euro might not be enough. On Tuesday, Axel Weber, a member of the European Central Bank governing council, denied reports that Greece might need as much as 80 billion euro to avoid default.

The country needs to raise about 11 billion euro by the end of May, and about another 35 billion euro during 2010 to fund public spending such as public service pensions, and to finance structural reforms.