Germany rejects Greek bailout plan - as it happened

Germany says Greek proposals for a six-month extension to its bailout programme do not go far enough

4.12pm GMT

Before we close up for today, here is a summary of the main events:

3.50pm GMT

Kate Connolly, the Guardian's Berlin correspondent, brings us more on Germany's rejection of Greek proposals:

Schauble continues to insist that Greece sticks to the bailout conditions agreed with previous governments under which financial support will be given only in exchange for substantial structural reforms.

The finance ministry's position risks deepening splits within Europe over how to deal with Greece as an end of February deadline nears at which the previous bailout agreement with its creditors and the European Central Bank runs out, leaving Greece facing bankruptcy.

3.43pm GMT

Ratings agency Standard & Poor's says a Greek exit from the euro would have limited direct contagion frisks for other sovereigns.

S&P credit analyst Moritz Kraemer:

All things considered, we believe that a Grexit would not lead to a degree of direct contagion that would drive other sovereigns out of the euro, not least because the eurozone rescue architecture is more robust than during the last Grexit scare in 2012.

We believe that the financial burden of a Grexit on the remaining 18 eurozone sovereigns would be moderate and absorbed over decades, and we therefore do not expect that a Grexit, by itself, would have significant rating implications for these sovereign.

2.47pm GMT

Reuters says the message from Greece is that eurogroup finance ministers have two options tomorrow - accept the deal it has put on the table or reject it.

Eery silence from Greek officials on Germany's rejection of Athens' proposal. Insiders expressed surprise that officials had "had the time" to properly contemplate the request but refused to be drawn further. When the response comes it will come from the top, they said.

Meanwhile, however, comments by former French president Valery Giscard d'Estaing re Greece leaving the euro zone have caused some commotion.

Main thing is #Schaeuble remains loyal to his principles! #Greece #eurogroup pic.twitter.com/CllKLM00LN

2.36pm GMT

A reader has kindly pointed out an important typo in my 12.53 post on the euro.

It should have read (and now does):

2.27pm GMT

"The white flag has been raised over Athens" according to Larry Elliott, the Guardian's economics editor.

Greece has bowed to the intense pressure of its eurozone partners and will stick to austerity. After defiantly saying for the past three weeks that it will end the country's fiscal waterboarding, the Syriza-led government is suing for peace.

That, bluntly, is the only way to interpret news that Greece has formally asked for a six-month extension to its bailout agreement. There is no longer the pretence that the bailout is to be replaced by a loan agreement with no strings attached. The hated troika of the European Central Bank, the European Union and the International Monetary Fund will be monitoring Greece's economy for the next six months, something that has been anathema to Syriza until now.

2.05pm GMT

Developments in Greece have rather overshadowed the publication of the European Central Bank's first set of minutes (which can be found here).

Jennifer McKeown, senior European economist at Capital Economics, says there are few surprises in the report from the meeting held on 22 January, at which the ECB agreed a a1.1tn programme of quantitative easing.

The first ever timely publication of ECB minutes confirms that support for the new QE programme was not unanimous and highlights the Bank's reluctance to take on more risk related to peripheral governments' debts.

[The account] supports President Draghi's explanation last month that while all members backed the idea of QE, some were not ready to implement it now. Members' votes are not published.

1.51pm GMT

Some brutal headlines out of Germany at the moment: "Schiuble smashes Athens' request" etc pic.twitter.com/m2Y7m9Fsgy

1.05pm GMT

Germany's rejection of Greece's proposals is a reminder of how volatile and changeable the situation is.

Kathleen Brooks, research director at forex.com:

The Greek crisis remains fluid, and the situation continues to change on a daily basis. Yesterday, the outlook was bleak until the ECB stepped in a boosted its emergency lending assistance to Greek banks. Today, the situation improved further on the back of news that the eurgroup will meet on Friday , which is a sign that Greece may have shifted its negotiating position to a more eurogroup-friendly stance. However, excitement is being contained after Germany said it would reject the deal proposed by Greece in its current form.

The Eurogroup meeting on Friday, the third in a week, comes after Greece requested a 6-month bailout extension. The good news is that, if approved, Greece will be able to pay back the EUR 21 billion of principal debt repayments that come due between now and August. The bad news, is that even if this extension is approved, we will be back in the same position in 6-months' time and Greece's long-term debt problems remain unsolved.

12.53pm GMT

Germany's tough stance on Greece (rejecting its bailout extension plan) has sent the euro lower, down 0.3% against the dollar at $1.13595.

Greek shares are still up but to a lesser extent than earlier in the trading session. The ATG is up 0.8% at 854.17.

It's time for the #Eurozone to reject the German Finance Ministry @schieritz German finance ministry: letter from Greece not acceptable

Confirmed. #Schaeuble refuses Greek request. Lack of supervision and commitment. http://t.co/ci15aHHcY3

12.45pm GMT

Germany has thrown a major spanner in the works, rejecting the proposals put forward by Greece.

The letter from Athens is not a proposal that leads to a substantial solution.

In truth it goes in the direction of a bridge financing, without fulfilling the demands of the programme. The letter does not meet the criteria agreed by the eurogroup on Monday.

12.30pm GMT

The European Commission has welcomed the bailout extension request from Greece, claiming it could pave the way for compromise and stability in the eurozone.

A spokesman for Jean-Claude Juncker, EC President, said:

President Juncker sees this letter as a positive sign which, in his assessment, could pave the way for a reasonable compromise in the interest of the financial stability in the euro as a whole.

The detailed assessment of the letter and the response is now up to the eurogroup.

12.01pm GMT

Guardian reporter Jennifer Rankin is in Brussels and bringing us updates on a potential deal for Greece.

She says eurozone officials are meeting in the Belgian capital today to assess the Greek proposals and lay the groundwork for the emergency meeting of eurogroup finance ministers tomorrow.

11.49am GMT

Greek finance minister Yanis Varoufakis has written to the president of the eurogroup, Jeroen Dijsselbloem, to put the bailout extension request into context.

Dear President of the eurogroup,

Over the last five years, the people of Greece have exerted remarkable efforts in economic adjustment. The new government is committed to a broader and deeper reform process aimed at durably improving growth and employment prospects, achieving debt sustainability and financial stability, enhancing social fairness and mitigating the significant social cost of the ongoing crisis.

11.37am GMT

Greek investors are feeling increasingly optimistic that a deal can be struck between the government in Athens and the rest of the eurozone.

The main ATG index is now up 2.9% at 871.86. The Greek banks are among the main beneficiaries, partly because of the ECB's agreement to hand them a a3.3bn liquidity extension.

11.20am GMT

If Greece has capitulated, officials are putting on a brave face according to Helena Smith, the Guardian's correspondent in Athens.

Government officials close to prime minister Alexis Tsipras are sounding a triumphant note. Helena brings us this report:

The request for a sixth-month extension of the financial assistance programme propping up the country's economy is "in total accordance" with the leftist-led government's electoral mandate, prime ministerial aides insist.

"It respects the popular will, promotes the dignity of [our] society and at the same time is acceptable to our partners," officials were quoted as saying in the financial daily, Naftemporiki, adding that it would provide a "protective umbrella to Greece's financial system" while allowing its austerity-whipped society to breathe.

11.12am GMT

Economists at German bank Berenberg believe there is a 65% chance that Greece will stay in the euro, but...

That leaves a 35% risk of Greek default and euro exit: In practice, this could happen in two ways: (1) the double populist coalition rejects the Eurozone offer and starts printing money; (2) Mr Tsipras calls a referendum which concludes in a vote for exit, despite 80% of Greeks currently wanting to stay.

In the first few months after the exit decision, Greece would have to survive a collapse of its financial system amid widespread default. Economic uncertainty and capital controls would trigger severe output contraction.

10.56am GMT

Commentators on Twitter say the Greek request appears to amount to a climbdown.

Looking as if #Greece & #Syriza folded in all but name & agreed extend current terms. If true, domestic fallout & party management difficult

Is it me or has the Greek gov't just capitulated?

Probably the most important part of #Greece extension proposal is the fact #Troika can stay and monitor

10.48am GMT

More Reuters snaps:

10.41am GMT

We have yet to hear from either the Greek finance minister Yanis Varoufakis or the Greek PM Alexis Tsipras on the bailout extension request.

But the noises coming out of Greece suggest the tone of the submission is reconciliatory.

10.21am GMT

Why set up meeting upon meeting? During WWII the Cabinet was in constant session. #Eurogroup

10.20am GMT

A few more details are emerging on Greece's request for a six-month bailout extension.

Reuters snaps, based on a conversation with a Greek government official:

10.14am GMT

Eurogroup finance ministers meeting will kick off at 3pm in Brussels (2pm UK time) tomorrow, the boss confirms.

#Eurogroup Friday in Brussels as of 15.00.

9.59am GMT

Greece's official bailout extension request has triggered an emergency meeting of the eurozone's finance ministers on Friday.

It will be up to them to consider whether to accept or reject the Greek proposals.

Greece asks EU for loan extension, says government source http://t.co/5UTUs1br1N

Eurogroup chief #Dijsselbloem confirms he has 'received Greek request for six months extension'

Euro rises on hopes for Greek debt deal http://t.co/4JBZi8q7d3

9.39am GMT

It is official! Jeroen Dijsselbloem, the eurogroup's President, has confirmed receipt of Greece's request for a six-month bailout extension.

Received Greek request for six months extension.

9.35am GMT

A note of caution: the Guardian's reporter Jennifer Rankin is in Brussels and says there is no official confirmation from either side that the Greek bailout extension request is in.

So far all we have to go on is a Reuters snap. More soon.

9.30am GMT

Greek investors are happy. The main ATG index is up 1% at 855.85.

The bailout extension request, combined with the ECB's decision to extend an additional a3.3bn of funding to Greek banks, is driving confidence in Athens this morning.

Que Sera Sera - whatever will be will be .... The future's not ours to see - Que Sera Sera #Greece #Eurocrisis

9.24am GMT

A Greek government official told Reuters the bailout extension has been requested. Specifically, Athens has requested an extension to the so-called "master financial assistance facility agreement" with the eurozone.

However, Greece is proposing to change some of the terms of the original agreement. We will bring you more detail and reaction as it comes.

9.14am GMT

BREAKING: It's happening. Greece has formally submitted a request to extend its bailout programme for six months.

9.06am GMT

Away from Greece, the European Central Bank will publish minutes of its latest policy meeting for the first time today.

The first set of minutes should be interesting, relating to the ECB's crucial January meeting when it finally pushed the button on a a1.1tn programme of quantitative easing.

#ECB Set to Release Meeting Minutes for the First Time Ever. http://t.co/ItpK5Tcadv

8.42am GMT

Europe's major markets have opened slightly lower as investors pause to take in developments (or lack thereof) in Greece.

8.26am GMT

The European Central Bank would be happier if Greece introduced capital controls according to a German newspaper.

It would allow the country to stem the amount of money flowing out of its banks and out of the country.

The ECB governing council and the ECB banking supervisor would be more comfortable if there were capital controls to prevent the banks bleeding money.

FAZ story on #Greece & #ECB: http://t.co/ZVne2cwdVE 'ECB GC would prefer that Greece introduces capital controls to prevent capital flight'

7.58am GMT

Good morning.

It is another crucial day for the future of Greece. Athens is expected to submit its proposal for an extension to its loan agreement today, a day before eurozone finance ministers make a decision on whether to accept the terms.