Goldman's O'Neill says Greek default closer

Tourists are seen through a cafe's smashed windows after Wednesday's riots in Athens' central Syntagma (Constitution) Square June 16, 2011.

ST PETERSBURG, Russia (Reuters) - Greece will keep moving closer to default unless European Union policymakers stop sparring in public about its debt crisis, Jim O'Neill, chairman of Goldman Sachs Asset Management, said on Friday.

"It is like open theatre," O'Neill told Reuters Insider television in an interview at the St Petersburg International Economic Forum in Russia.

Asked if he thought Greece would default, he said: "I think the risk of it is getting closer unless European policymakers are a bit more sensible."

He urged European policymakers no to "keep on publicly sparring with each other, like some game theory between the ECB, the French and the Germans."

He said the risk of Greece leaving the euro was probably some way off and that Greece did "not matter economically".

But he warned that contagion did matter and that if Italy and Spain were badly affected it would be a "big problem".

He said the euro was unlikely to remain above $1.40.

"I cannot really see how it can stay above 1.40," he said.

(Reporting by Guy Faulconbridge, editing by Timothy Heritage)