Greece hopes for bailout extension breakthrough at EU summit - live updates

All the latest economic and financial news, as the leaders of Germany, France and Greece meet in Riga tonight

• Insiders say Greek deal is on the table
• But Schiuble remains cautious
• Latest: Leaders arrive in Riga
• Introduction: Merkel and Tsipras to meet tonight

11.32pm BST

Germany's spokesman adds that Merkel, Hollande and Tsipras agreed to stay in close contact, and also agreed that Greece should keep negotiating with her creditors.

So, friendly negotiations, but no indication of a major breakthrough...

11.24pm BST

"Friendly and constructive" the Germans say of #Greece talks in #Riga. But stick to completing current bailout. https://t.co/z1n0whe3Z8

11.22pm BST

A late newsflash from Riga -- a German government spokesman has said tonight's talks centred on finding a successful completion to the current Greek aid programme, which runs out at the end of June.

Spokesman: Merkel-Hollande-Tsipras talks focused on successful completion of bailout http://t.co/HaUG92vay2

11.21pm BST

The meeting between Tsipras, Merkel and Hollande lasted more than two hours. The trio didn't speak to reporters as they left, alas.

10.59pm BST

Greek media say #Tsipras, Merkel, Hollande meeting ended #RigaSummit

9.51pm BST

The French government has kindly provided some photos too.

En marge du Sommet du Partenariat Oriental i Riga, @fhollande s'est entretenu avec A.Merkel et A.Tsipras #Riga2015 pic.twitter.com/jxmG6DMhhf

9.50pm BST

Here's an official photo of tonight's talks:

9.09pm BST

The New York stock market just hit a new closing high, suggesting Wall Street remains unperturbed by events in the eurozone.

US equities closed slightly higher on the day: DJIA +1, S&P 500 +5. New record high for the S&P 500! ^MW

8.45pm BST

The eagerly awaited meeting between the leaders of Germany, France and Greece is getting underway.

Even though this photo is blurry, you can make out Angela Merkel's jacket....

Everybody in da house #Merkel-#Hollande- @atsipras about to begin #Greece #EUSummit pic.twitter.com/jzB5B9keXz

8.09pm BST

European Union foreign policy chief Federica Mogherini has arrived, straight from a visit to the Middle East to discuss issues including a two-state solution for Palestine.

In Riga for the Eastern Partnership Summit

7.51pm BST

A quick recap:

EU leaders have arrived in Riga for a two-day summit on Eastern European partnership, but with Greece's debt crisis looming over them.

#EaP #Summit: Roundtable Dinner for the HoSG and head of delegations @eucopresident @eu2015lv http://t.co/q9I6ljwIRB pic.twitter.com/iv6kpH5yad

"A very senior German official speaking in the most measured of ways and with a great deal of forethought described this as a possible outcome that was now very seriously being discussed,"

"It would be entirely logical. If it doesn't happen we're looking at a scenario like Cyprus with capital controls and banks closed....as close as you can get to euro exit.".

With Tsipras we want to find solutions to restore confidence and release the funds that have been planned,"

"So it will be a friendly talk, but a talk in which we have to be able to draft solutions."

7.42pm BST

Alexis Tsipras certainly looked happy when he arrived at tonight's working dinner -- I guess travelling in a military transport jet must be quite invigorating....

7.38pm BST

France's president has suggested tonight that talks between Alexis Tsipras, Angela Merkel and himself could help reach a deal.

Bloomberg has the details:

French President Francois Hollande opened the prospect of striking a political deal with Prime Minister Alexis Tsipras that unlocks bailout aid for Greece within days.

Speaking before a summit of European Union leaders in Riga, Latvia, Hollande said that a meeting he and German Chancellor Angela Merkel will hold with Tsipras later on Thursday will help pave the way for an accord to be hammered out by finance ministers at the end of May or early June.

Hollande says 3-way talks with Tsipras and Merkel will pave way for Greek deal http://t.co/FrTirIPuhR pic.twitter.com/MAb7zSgfOW

7.15pm BST

Interesting rumour, that would make sense if a compromise is being hammered out in the days ahead...

#Greece | @protothema reports of a meeting of Tsipras, Dijsselbloem, Juncker & Draghi late next week in Brussels.

7.03pm BST

Is Greece's government, once again, too optimistic about a deal? Greek journalist Giannis Papageorgiou is hearing as much:

Gov is optimistic about an agreement on #Greece. But what I am learning from #Brusselsgroup, #berlin and #WashingtonDC are quite different

7.00pm BST

Council president Donald Turk arrived in a 'let's get down to business' mood:

6.58pm BST

France's president is here....

6.54pm BST

German chancellor Angela Merkel has arrived for the working dinner, followed by that informal meeting with Alexis Tsipras.

6.36pm BST

The Riga Summit, says European Council president Donald Tusk, is an opportunity for the EU to build stronger ties with the countries to its East, and to reiterate its opposition to conflict in the region:

I have come to #RigaSummit with 3 simple, clear messages pic.twitter.com/A8iCHcINVg

1: EU stays the course & is as committed to #EaP as ever despite intimidation, aggression & even war

2: EU wants to advance relations with all 6 #EaP countries. This means tailored cooperation, increasing resilience & state-building

3: EU is a trusted #EaP partner for the long haul. #RigaSummit not about giant steps forward but concrete progress step-by-step

6.18pm BST

We're used to seeing Alexis Tsipras travel in economy class - but today he switched to a military flight to reach Riga.

PM's office releases photos of Tsipras trip to Riga on military transport plane #Greece pic.twitter.com/KdLGvw5qpd

6.15pm BST

More arrivals. And Ukraine's President Petro Poroshenko (left) got a warm-looking welcome from Latvia's president, Andris Berzins.

5.19pm BST

Ahead of tonight's summit in Riga, European markets moved higher - just - amid uncertainty whether or not Greece would be offered a bailout extension. Eurozone data earlier was mixed, while UK retail sales were better than expected - which boosted the pound - while US confidence and housing figures were disappointing. The final scores showed:

5.08pm BST

Arrival in Riga, Latvia for the Summit #euco #Greece pic.twitter.com/EjDEQcCHNV

4.58pm BST

And they're starting to arrive in Riga for tonight's summit:

3.49pm BST

Tsipras arrives in Riga for EU summit, talks with Merkel, Hollande http://t.co/qBaLCvQPWm

3.42pm BST

The disappointing eurozone consumer confidence figures may not be as disappointing as all that, say analysts. Howard Archer at IHS Economics said:

Eurozone consumer confidence eased back for a second month running in May. This follows on from the purchasing managers reporting that overall manufacturing and services expansion slowed for a second month running (and at a slightly faster rate) in May according to the purchasing managers.

This will likely fuel concern that the eurozone's recovery is starting to flag as the recent stimulus it has received is diluted by a recent firming in the euro, oil prices and bond yields from very low levels.

In this afternoon's instalment of the ongoing run of disappointing eurozone data, we bring you consumer sentiment. According to a flash estimate of consumer confidence by the European Commission, sentiment fell to -5.5 in May. Gains made in the previous two months have now been erased. The further deterioration in sentiment is probably partly explained by the fact that rising oil prices are felt at the pump: average a95 fuel prices reached a1.49 in May, up 4 cents from April and 17 cents from January lows. Financial market turmoil may also have hurt confidence.

But even after this correction, eurozone consumers remain upbeat, with sentiment still well above its long term average of -12.5. This leaves scope for retail sales to rebound after their disappointing setback in March.

3.12pm BST

In the US, the latest figures have also come in below forecasts:

Philadelphia Fed Business Outlook (May) 6.7 versus 8.0 expected, previous 7.5

US Existing Home Sales (Apr) 5.04 Mln versus 5.23 Mln expected, previous 5.19 Mln revised to 5.21 Mln

3.09pm BST

Perhaps this is no surprise, with increasing talk about a Greek default and exit from the euro, but eurozone consumer confidence came in much worse than expected this month.

The confidence index fell to -5.5 from -4.6 the previous month, and analysts forecasts of -4.8.

MISS: EZ Consumer Confidence (May A): -5.5 v -4.8e v -4.6 prev #eur

2.54pm BST

The European Central Bank believes its QE bond buying programme is working as it intended, according to the minutes of its last meeting released earlier, and concerns about the scarcity of supply of suitable bonds were exaggerated. Carsten Brzeski on ING Bank sums up the bank's comments:

The just released minutes of the ECB, officially known as the account of the last ECB meeting, did not provide any new crucial information. In fact, the minutes confirmed the ECB's positive stance on economic developments, while at the same time stressing that all positivity was conditional on the full implementation of QE.

The minutes also showed that permanent inner conflict the ECB is fighting with. On the one hand, the ECB acknowledges and sometimes celebrates the positive impact from QE, while on the other hand it keeps on hammering on the need for structural reforms.

2.25pm BST

The Guardian has learned that a four-month extension of Greece's current bailout is on the table, and will probably be discussed by Angela Merkel and Alexis Tsipras tonight.

And despite Schiuble's caution, the idea of giving Greece some leeway to draw up reforms is apparently being "very seriously" considered.

"A very senior German official speaking in the most measured of ways and with a great deal of forethought described this as a possible outcome that was now very seriously being discussed,"

"It would be entirely logical. If it doesn't happen we're looking at a scenario like Cyprus with capital controls and banks closed....as close as you can get to euro exit.".

"The big challenge is that it doesn't look like a repetition of the extension we had in February. It would have to look a lot different because it is that solution that got us to where we are today. There's only one point in creating a financial bridge like this and that is if the European side genuinely believes it will lead to reform."

"It's the one scenario that brings the two of them [Merkel and Tsipras] together and I have no doubt they will be talking about it [tonight].".

"He still has to make the choice between staying in the euro zone and enforcing the necessary concessions or alleviating the suffering from austerity and leaving the euro zone."

"We owe it to the generations that are coming to pour onto the streets to prove to the profiteers that we have no more blood to give " and to say to our government that we are with it as long as it doesn't take a step back. Now is the time to show to all that we have preserved the memory of freedom."

1.58pm BST

Journalist are already arriving in the Latvian capital:

Surprise at #EasternSummit in #Riga: they named already a street after chancellor #Merkel! pic.twitter.com/ds6YLjuCPt

1.57pm BST

The Eastern Partnership summit in Riga is due to kick off at 8pm local time (6pm BST) with an informal working dinner at the House of the Blackheads.

1.09pm BST

Germany's finance minister has cautioned that a Greek breakthrough is not imminent.

"What I know from discussions with the three institutions does not back up the optimism arising from announcements from Athens.

There is not yet any substance to the mere announcement that we are closer to an agreement. This is still within the realms of atmosphere."

12.14pm BST

Here's a handy chart showing how Greece could reach a deal -- and all the different ways it could go wrong:

Scenarios for #Greece in one chart. (via Barclays) pic.twitter.com/oTkRJ8muBw

11.28am BST

The European Commission has refused to comment on last night's report that a bailout extension is being worked on. Our focus is to conclude the current review as fast as possible, it says.

Day 92: EU won't confirm or deny bailout extension programme - 'working to conclude current review as swiftly as possible'

11.19am BST

Mujtaba Rahman, practice head at Eurasia Group, has predicted that Greece and her creditors will reach a short-term deal by early next month.

In a new research note, Rahman suggests that officials will hammer out a short-term financing deal to cover Greece's immediate needs.

We remain of the view a short term financing deal that avoids these risks is likely. This will now probably happen in the first week of June. Moreover, we think this agreement will not fundamentally jeopardise the integrity of the governing coalition.

This will be more likely, though not inevitable, in the context of a third bailout which could be subject to a referendum in September/October.

Critically, we think it unlikely Tsipras will lose his parliamentary majority (meaning the number of defections will be less than 12 MP's). Our belief is substantiated by the latest polls, which once again show Greek voters' growing dissatisfaction with the negotiating strategy of the government.

11.16am BST

Table settings are being shuffled in Riga....

#EU official says #Merkel no longer sitting next to @atsipras at #Riga summit dinner tonight.

10.46am BST

Angela Merkel has addressed the German parliament this morning, before heading to Latvia for the EU summit tonight.

We see the G7 as a community of values. And that means working together for freedom, democracy, and for the rule of law. That means respecting the laws of nations and the territorial integrity of nations."

Russia's actions in Ukraine are not compatible with that. A return to the G8 format is not imaginable as long as Russia doesn't act according to those basic values."

10.29am BST

Shares are inching higher on the Athens stock market this mornings, on hopes that Alexis Tsipras can make some progress in his talks with Angela Merkel and Francois Hollande tonight.

The main Athens index is up 0.5% this morning, outperforming the rest of Europe.

'Last night's Fed minutes all but ruled out a rate hike in June owing to the weakness of first quarterly growth and the lack of inflation.

More recent weak macro data from the US would also imply that even this set of minutes is out-of-date and the market is now pricing in rate hike for early 2016. No surprises were to be found within the minutes.

10.04am BST

US investment management giant BlackRock remains pretty confident that Greece and her creditors will reach a deal in time:

*BLACKROCK SEES 20-25% CHANCE OF GREECE LEAVING EURO AREA

9.58am BST

The jump in UK retail sales suggests Britain's drop into negative inflation last month is not the start of a deflationary spiral:

Retail sales up 4.7% year on year - well ahead of consensus. #NotWhatADeflationarySlideLooksLike

9.39am BST

UK retail sales have just smashed forecasts, sending the pound jumping.

Sales were up by 4.7% year-on-year in April, jumping by 1.2% month-on-month.

Go the UK! retail sales in April 2015 are estimated to have increased by 4.7% compared with April 2014. #GBP #GDP

*U.K. APRIL CLOTHES SALES RISE 5.2%, MOST IN FOUR YEARS - t-shirts, shorts and flippie-floppies

9.30am BST

Dr Nick Spiro, managing director at Spiro Sovereign Strategy, is concerned by today's PMI surveys from the Big Two European nations:

It's bad enough that France is struggling to recover, but even more concerning that Germany's economy continues to slow - and fairly significantly at that, with the composite PMI falling from 54.1 to 52.8.

Although still expanding, growth in the services and manufacturing sectors has lost considerable momentum. This suggests that economic weakness in the first quarter of this year has extended deep into the second.

9.23am BST

Back in the UK, Tesco has suggested that it could potentially claw back the seven-figure payment handed to its former CEO, Phil Clarke.

Tesco's annual report, released this morning, contained this snippet:

On termination of employment, in accordance with the terms of his contract, Philip Clarke was entitled to receive a termination payment of 1,217,000... Should it be determined in the future that there was gross misconduct the Company will seek recovery of the termination payment.

Tesco says may recover 1.2m payoff for ex-CEO http://t.co/NqQmRhSTE0

9.13am BST

Europe's jobs crisis may finally be easing.

Firms are hiring staff at the fastest pace since 2011, the early days of the eurocrisis, according to Markit's PMI survey.

#Eurozone hiring picks up: PMIs show employment rising at the fastest rate for 4 years in May pic.twitter.com/ZH5jfBqBWN ~@WilliamsonChris

9.11am BST

Germany and France are now being outpaced by the rest of the eurozone, according to Markit's monthly healthcheck of the region.

Companies across the euro periphery are enjoying their best quarter since the credit crunch struck the global economy, with job creation and growth surging.

The core is the periphery. The periphery is the core. pic.twitter.com/xHgIw71Ctg

"The survey results suggest the German economy is on course for a reasonable expansion of 0.4% in the second quarter, but France is likely to struggle to see growth exceed 0.3%. However, it's outside of these two 'core' countries where the main action appears to be, with the rest of the region enjoying its best quarter of economic growth and job creation for almost eight years."

8.49am BST

Greek PM Alexis Tsipras will meet with Francois Hollande in Riga tonight as well as Angela Merkel, in an attempt to reach a political solution to the crisis.

That's via the Kathimerini newspaper, which adds:

Tsipras is hoping that his meeting with Merkel and Hollande will result in some kind of political gesture that will help the pace and direction of deliberations with the institutions. The Greek leader is expected to tell his counterparts that his government has made as many concessions as it can and that the lenders now have to find a way to move closer to Greece.

Sources said the premier will stress that the agreement will have to show that there has been a change in Greece's policy mix.

8.47am BST

Not a good morning for the economy of #Germany as Markit composite #PMI falls to 52.8 with both services and manufacturing growth slowing

8.46am BST

Growth across Germany's companies has slowed to a five-month low, adding to concerns that Europe's largest member is coming off the boil.

The German Composite Output Index calculated by Markit has fallen to 52.8, down from 54.1 in April. Firms reported weak demand, and rising cost pressures.

"While the survey data are consistent with further GDP growth heading into the middle of the year, it looks as if this rate of expansion of the German economy will remain sluggish in the months ahead.

German PMIs on strike. https://t.co/9KO53SDY6q

8.31am BST

France's economy is strengthening this month, although its factories are still finding conditions quite tough.

That's the verdict from Markit's latest assessment of the eurozone' second largest economy. Its Flash France Composite Output Index rose to 51.0, up from 50.6, showing growth picking up [50 is the cut-off point between expansion and contraction].

"The French private sector posted further modest output growth in May, suggesting that economic expansion is being maintained through the second quarter.

The service sector remained the driver of growth, offsetting another contraction in manufacturing."

8.25am BST

The two-day Riga summit which begins tonight is also David Cameron's first meeting with fellow leaders since winning the general election.

The British have asked the EU to accept an architecture that demonstrably shows the UK is never heading to the same destination and has a different category of membership, otherwise the UK will end up outside the EU.

8.17am BST

Is the eurozone considering throwing Greece a lifeline by extending its existing bailout over the summer?

German newspaper Si1/4ddeutsche Zeitung claimed last night that EU policymakers are considering extending the existing programme until the autumn.

At risk of looking silly in a few days - a Greek deal feels close. Tide over till Autumn with classic Euro-fudge on pensions/labour market?

8.02am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

"We know that decisive decisions ultimately are taken at the level of finance ministers in the Eurogroup but at this critical moment a meeting between Tsipras and Merkel can only be helpful."

"The persistence of the architects of this regime and their insistence of keeping the country on the same track, is simply irrational. We want to stop the vicious cycle of debt and recession. Its not about stubbornness. Its about preserving Greece and its people."

@yanisvaroufakis tells #c4news "If we can pay the IMF and pensions and salaries, then we shall, if not, Greece faces difficult choices."