Greece crisis: Creditors to work on Plan B – as it happened

Julia Kollewe and Katie Allen

from on 2015-06-26 18:52 (#CG07)

7.52pm BST

With that story on ministers getting ready to discuss measures to contain the fallout from a potential default, we are now closing the live blog for today but Graeme Wearden will be back with a weekend special edition on Saturday.

Before I go, a quick summary of the main events from a day characterised again by a war of words and yet another suggestion - quickly rebutted by Greece - of kicking the can another few months down the road.

This evening on Syntagma, it's the Communists pic.twitter.com/o0LCa717u1

Could get interesting on Syntagma this weekend if the rival #Greece demonstrations of the past few days - Stay in! Get out! - ever collide

7.14pm BST

On the eve of crunch talks in Brussels, our main story tonight is that eurozone finance ministers and Greece's creditors are to draw up plans for emergency measures to ringfence the country's financial system unless the Greek prime minister, Alexis Tsipras, accepts the creditors' terms for a five-month extension of Athens's bailout on Saturday.

Our Europe Editor Ian Traynor reports from Brussels:

6.57pm BST

Greek finance minister Yanis Varoufakis sees no reason his country and its creditors will not get a deal at Saturday's meeting of eurozone finance ministers.

Varoufakis, who said earlier that Greece was determined to stay in the eurozone but that Athens would not sign an agreement with lenders that it considered "unviable", is quoted in a series of alerts on Reuters this evening:

"If we reach an agreement tomorrow depends on the institutions. We dont believe in 'take it or leave it' in Europe." pic.twitter.com/uBsd4j1jpO

6.45pm BST

Our reporter Jon Henley is in Syntagma square where communist party supporters have gathered to protest against the demands for more austerity by creditors.

This evening on Syntagma, it's the Communists pic.twitter.com/o0LCa717u1

6.42pm BST

Tsipras's impossible dilemma

Veteran political commentator Yannis Pretenderis says not since the return of democracy in 1974, following the collapse of military rule, has Greece faced such a critical moment.

6.30pm BST

Over in Athens protesting communist party supporters have poured into Syntagma square, reports Helena Smith.

As I write thousands of communist party protestors have taken to the streets to protest against the demands for more austerity by creditors. Their rallying cry: "no to the new agreement, rupture with lenders."

6.29pm BST

If you were wondering what UK prime minister David Cameron thinks should happen, then turn to this story from my colleagues on a leaked diplomatic document.

6.13pm BST

Meanwhile, back in Athens, an emergency cabinet meeting is due to start shortly at the prime minister's office, the Megaro Maximou.

Ministers are already arriving to attend the meeting, reports Helena Smith. The Greek prime minister Alexis Tsipras has yet to appear but is about to land in Athens from Brussels.

#Greece Cabinet Council meeting about to start. Tsipras to brief Ministers on Brussels talks, to seek support for #Eurogroup mtng strategy.

6.04pm BST

Our Europe Editor Ian Traynor reports from Brussels that eurozone finance ministers and Greece's creditors are preparing to draw up plans for emergency measures on Saturday to quarantine the country in the event of default next week - unless Tsipras accepts the terms for a bailout extension.

More coming soon.

5.52pm BST

Looking beyond Tuesday's IMF payment deadline, economists at Citi have put out a handy chart of some key dates for Greece.

Under the headline "Are We There Yet?" the investment bank's economists write that they are still expecting an interim deal:

An 'interim' deal remains our baseline - We still believe that an agreement to extend the current aid programme (for up to six months) is likely to be found soon as modest concessions from both sides appear achievable. But we acknowledge increasing risks that the process could take us beyond the June 30 deadline, which would likely result in the imposition of capital controls, after an IMF default.

i) failure to pass the package in parliament, ii) failure to implement 'prior actions', iii) increasing social tensions, iv) deepening splits within Syriza leading to a possible government collapse and early elections."

5.32pm BST

The Greek government has just produced one of its famous non-papers, this time a seven-point one, explaining why it cannot accept the proposal by creditors to extend the country's current bailout programme until November, reports Helena Smith in Athens.

It states:

"The proposal by the institutions to the Greek government entailed immediate legislation of deep recessionary measures [which would hurt the already wounded social fabric of the country] as a pre-condition of five months of financing, which anyway, was judged to be wholly inadequate."

"If this proposal had been accepted by the government and parliament, people and markets would have faced another five months of further shrinkage which would have lead to yet another negotiation under conditions of crisis. That is one of the reasons why the institutions' proposal cannot be accepted."

5.15pm BST

Here is more from Reuters reporting an EU official saying chances of a deal at Saturday's crunch meeting are more than 50%.

Its correspondents in Brussels write:

4.59pm BST

As the Greek prime minister Alexis Tsipras heads back to Athens from Brussels, voices of dissent are growing in his far left Syriza party, reports Helena Smith.

The time has come to say the "big no", the Syriza MP Yannis Micheloyiannakis said, praising the Greek leader's rejection of the lenders' offer to prolong Greece's current bailout programme until November.

"There is no bigger mistake than accepting an extension until November in exchange for the blood of measures and our own money," the MP said in an announcement.

"It would be humiliating, and at the same time tantamount to acceptance of the course towards a third memorandum [bailout accord] in November. Now is the time to say the big no."

4.52pm BST

While Greek officials are briefing that nothing has been agreed to, an EU official is now quoted on Reuters as saying hopes of a deal are still relatively high.

4.42pm BST

As the Greek crisis hurtles towards another big deadline, our reporter Jon Henley [not our Southern Europe Editor John Hooper, as previously reported - with apologies to both] has been considering the role of IMF head Christine Lagarde and what could well be a career-defining few days for the Frenchwoman.

Jon writes:

By turns business-like and ineffably charming, straight-talking and surprisingly funny, Lagarde's unusual mix of Gallic charm and Anglo-Saxon effectiveness is undoubtedly better appreciated in international circles than in France. The next few days could make or break her reputation.

4.29pm BST

Helena reports that the deputy social security minister Dimitris Stratoulis has also levelled an excoriating critique of the lenders' latest proposal.

The creditors' latest offer amounted to "the ultimate demolition" of the welfare state and "total misery and impoverishment" of those already on very low pensions, he said.

"[We] will erect a wall against the brazen claims of creditors who seek the complete humiliation of the left government and [whose actions will] lead to the enslavement and extermination of [our] people."

4.25pm BST

Over in Athens the labour minister Panos Skourletis has told our correspondent, Helena Smith, that there will be no agreement "until there is an agreement" and that the entire government is now on standby with the possibility of an urgent cabinet meeting being held tonight, once prime minister Alexis Tsipras returns to the Greek capital.

4.12pm BST

Is this the "final deadline", ask economists at Morgan Stanley. Either way, they are downbeat about the chances of this weekend coming up with a deal that amounts to a long-term resolution of the Greek debt crisis.

Writing in their weekly research note, they comment:

Even though the economic incentive is to secure a deal, the political incentive may get in the way, especially given a very tight deadline. The damage to mutual trust between debtor and creditors that the negotiations have produced is quite substantial, in our view.

That's why, even if there's an 11th hour resolution, the chances are that it will mostly provide short-term financing to the Greek sovereign against strong monitoring of whether the creditors' demands truly are implemented. With Greece likely to struggle on this front, any agreement over the next several days - while positive for sentiment - is likely to postpone the next bout of political volatility a few months down the road, until a more visible shift in Greece's domestic policies comes into play.

4.06pm BST

Helena Smith in Athens will have more shortly on Greece's move to reject a proposed bailout extentions. In the meantime, a quick refresher on what's on the table in these cash-for-reforms talks. The main sticking points have been pensions followed by VAT and other taxes. This lays out the main issues:

3.40pm BST

Government sources are also quoted as saying that the lenders' latest proposal is simply unviable - and the rescue funds offered (a15.5bn) are insufficient to cover Greece's financing needs, reports Helena.

"No financing solution could work in the context of the proposal of the institutions," one said.

3.30pm BST

The Greek government has rejected a proposed five-month extension of the country's bailout accord, Helena Smith reports from Athens.

Greek officials have turned down the deal. "The text that was given to the Greek side is worse than the memorandum," one was quoted as saying by the Athens news agency.

3.27pm BST

If you are just joining us and wondering what is happening tomorrow and why it matters for Greece, for the eurozone and beyond, we have just published this Q&A on the Eurogroup meeting.

As EU policymakers have been stressing, time really does appear to be running out for Greece and its creditors to reach a deal. Then again, we have been here a few times before and already today there has been talk of extending Greece's bailout again.

2.48pm BST

Saturday's Eurogroup meeting has been brought forward by three hours to 2pm Brussels time (1pm BST).

2.47pm BST

Donald Tusk and Jean-Claude Juncker have finally held their press conference. Here are the main points:

European council head Tusk said there are three days left to strike a deal with Greece, and we are very close to the day when the game is over. Both struck a conciliatory tone, responding to earlier comments by Tsipras who accused creditors of "blackmail and ultimatums". European Commission president Juncker denied that the eurozone had issued an ultimatum to Greece.

"Tomorrow is a crucial day not only for Greece but also for the euro area as a whole. I am quite optimistic but not over optimistic."

"We have made progress ... There is a real chance of concluding an agreement."

"It is not political blackmail when we repeat day after day that we are very close to this day when the game is over ... This is fact."

2.40pm BST

The credit ratings agency Fitch has issued a warning about the prolonged nature of the debt talks and "lasting damage" to the Greek economy. It highlights the risk of Greece failing to make its bundled IMF payments on Tuesday as well as the risk of capital controls being introduced, espcially if the ECB pulls the plug on support for Greece's financial system.

A note just published by the ratings agency says:

The continuing talks between the Greek government and the country's official creditors are testament to the political will to secure an agreement, but the time-consuming and often confrontational nature of the discussions heightens key risks to the credit profile of the Greek sovereign and its banks."

Fitch's sovereign ratings reflect the risk of default to private rather than official sector creditors, so missing the IMF payment would not constitute a sovereign ratings default, but it would be credit negative. Arrears to the IMF by a high-income economy are unprecedented and would indicate extreme liquidity stress.

Implications for Greece's sovereign rating would depend on the country's ability and willingness to cure the missed IMF payment, and the institutions' response. For example, if an outline deal were agreed or appeared imminent, it is possible that the European Central Bank would maintain Emergency Liquidity Assistance (ELA) to Greece's banks. Without ELA, Fitch believes capital controls would likely be imposed.

Even assuming a deal is struck, it is unlikely that Greece would regain market access by the end of an extended second programme. The struggle to agree tax and pension reforms, the heated rhetoric that has at times accompanied this week's discussions, and popular opposition to austerity in Greece, suggest that negotiating a third programme (or equivalent) will be challenging, with recurrent risks of a loss of trust between Greece and its official creditors.

Prolonged uncertainty has done lasting damage to the Greek economy. The hit to investor, consumer, and depositor confidence could push the economy from stagnation to contraction (we forecast no growth this year)."

2.34pm BST

The Greek stock market is now up 1.1%. Germany's Dax and France's Cac have reversed earlier falls are now trading 0.3% and 0.8% higher, respectively.

The FTSE 100 index in London is still 0.45% lower, however.

2.24pm BST

Tsipras has gone on the offensive, accusing Greece's creditors of "blackmail" - a day after Merkel said "we won't be blackmailed by Greece".

The Greek prime minister told reporters after the EU summit:

The European Union founding principles were democracy, solidarity, equality and mutual respect. It was not based on blackmail and ultimatums. No one has the right to put in danger these principles.

2.15pm BST

US Treasury Secretary Jack Lew has been sharing his thoughts on the Greek crisis in an interview with Yahoo published today.

I hope they take this weekend seriously. The thing about the conversations around Greece that have been of concern to me is the number of deadlines, the number of times it's gotten right to the edge."

"The risk of an accident goes up the more times you have these [situations, and] everyone rushes to a deadline. I hope they can reach an agreement that prevents Greece from going through the deep pain that a breakdown would cause, and it doesn't create risks to either the European or the global economy. This is not the time for a shock."

1.59pm BST

News that the EU and IMF are now contemplating prolonging the country's bailout programme by another five months will land with the force of a bombshell in Athens, our correspondent Helena Smith reports.

There are few who will welcome this news. Kicking the can that is the great Greek debt crisis down the road will not only fail to staunch the political uncertainty that has plagued the country, but have potentially devastating effects for the economy.

It will be a major defeat for the government which has pushed for a comprehensive deal that could alleviate, once and for all, the negative consequences of this ongoing nightmare.

Now we have another case of 'extend and pretend' which has been at the root of the saga for the last five years. It is like a bad soap opera."

1.55pm BST

Germany's Angela Merkel has been giving a press conference in Brussels where Reuters quotes her as saying:

We have taken a step towards Greece... Now it is up to the Greek side to take a similar step."

1.51pm BST

German chancellor Angela Merkel has been again emphasising the make-or-break nature of this weekend's Eurogroup meeting, saying there are no plans to follow it up with a eurozone leaders summit.

Reuters reports Merkel saying she and her French counterpart Franiois Hollande have urged Greek PM Alexis Tsipras to accept the "generous offer" from creditors and that after concessions from their side it is now up to Greece to take a step in the direction of its eurozone partners.

1.35pm BST

It looks like a cash-for-reforms deal could be within grasp - finally. Ian Traynor reports from Brussels:

Terms still to be finalised but eurozone sources say differences are now minimal - that the pension issue is resolved, lots of VAT issues are resolved and that the differences on VAT amount to a risible a107m - peanuts. Creditors are still demanding a400m in defence cuts, while Greece is proposing a200m. Privatisation arrangements on regional airports are also said to be basically agreed.

1.10pm BST

On the bailout extension, our Europe editor Ian Traynor reports that a two-page paper from troika creditors was given to eurozone finance ministers on Thursday. They still need to study it at Saturday's eurogroup meeting at 5 pm. It's a15.5bn bailout money in a five-month extension till the end of November - a8.7bn from the eurozone bailout fund, a3.3bn in SMP (ECB bond profits due to Greece) and a3.5bn from IMF.

12.52pm BST

The final countdown: the fixed income research team at Deutsche Bank says:

We continue to believe the most likely outcome is a deal that keeps Greece in the euro area. Time is running extremely short and the risk of accident rises as a consequence. One cannot rule out scenarios such as non-payment plus capital controls or even pre-emptive capital controls. A referendum may be called. The additional stress created through these scenarios may yet be required to create the political consensus to close the deal.

Higher uncertainty is a risk but contagion should be more limited than it was 3-4 years ago. Financial institutions have markedly less exposure to Greece. Other peripherals have adjusted and are running current account surpluses. Their reliance of foreign investors has declined and private capital in these countries has been stable this year despite the exodus from Greece. Correlation between activity conditions in Greece and the rest of the euro area is down too and we are confident the ECB would if necessary act to reinforce its "whatever it takes" reputation.

12.36pm BST

There are also flashes on Reuters that Greece's international creditors are planning to extend the country's bailout by five months (to November), and release rescue funds of a15.5bn so Athens can pay back the IMF on Tuesday.

The funds would include the a7.2bn Greece is owed from its current bailout package and a1.8bn from the ECB for profits it has made from Greek bonds. See our previous story here.

12.18pm BST

Turning to Brexit: Schiuble also wants the UK to stay in the European Union.

12.17pm BST

German finance minister Wolfgang Schiuble is speaking now. It's the usual hard talk. According to Reuters, he said the Greek economy cannot grow without sustainable public finances and if we kick the can down the road, the situation will just get worse. He criticised the Greek proposals for simply increasing taxes, without spending cuts. Greece is well aware of the benefits of staying in the euro, he said, and warned that if markets lose confidence in policymakers, the euro will fall apart.

11.41am BST

Over in Athens, Helena Smith reports that Greece has persistently called for a solution to be found at a higher, political level - so in effect the German chancellor has now quashed Tsipras' demand - returning the ball to the court of eurozone finance ministers.

Merkel's cold shoulder is bound to further rile the Greek government following leaks that what is also being discussed is an extension of Greece's a240bn bailout programme and not a new comprehensive deal as Athens had wanted.

11.25am BST

A German finance ministry spokesman said the German negotiating team is heading to Brussels on Saturday with the goal of reaching a deal - and the ultimate goal is to keep Greece in the euro. "We are discussing a comprehensive package," said ministry spokesman Martin Jiger.

Greece's international creditors have made compromises in talks with Athens and it is now up to the Greeks to move, he said. He also described the troika's offer as "generous," as reported earlier.

It is now very clear that it is up to the Greek side to make their contribution to a solution to the problem.

Only then will there be a solution: the Greek government needs to move closer to the institutions and accept their generous offer.

11.23am BST

A German government spokeswoman said Merkel made clear that time is pressing on Greece. A deal must be struck by creditors and eurozone finance ministers, she said (thereby rejecting Greek calls for a eurozone leaders' summit).

11.19am BST

Over in Athens, talks between Tsipras, Merkel and Hollande have been concluded but may well continue again once the EU summit is over, Greek news outlets are reporting. Our correspondent Helena Smith reports: a government statement, issued within minutes of the three-way meeting being held in the offices of the French delegation at the European Council, said:

Alexis Tsipras informed the two leaders about the Greek proposal and emphasised that the Greek side did not understand why creditors were insisting on such hard measures. Negotiations will continue after the summit is concluded.

11.15am BST

Here's more on those private talks between Tsipras, Merkel and Hollande this morning, which lasted 45 minutes, courtesy of Reuters. A French source told the news agency:

On the substance, the gap is not so wide. They discussed what has to be done today and tomorrow to conclude on issues still to be settled relating to reforms, the extension of the programme and the question of financing.

11.11am BST

While we are waiting, a German finance ministry spokesman just said the Greek government needs to "move" in Saturday's negotiations. It is up to Greece to accept the "very generous" offer from the creditors.

11.06am BST

Donald Tusk, president of the European Council, and Jean-Claude Juncker, president of the European Commission will be holding a press conference soon. You can watch it live here.

10.59am BST

Tsipras, Merkel and Hollande discussed the possibility of extending Greece's bailout programme, according to Reuters, citing a French source. They had a private meeting before the final session of the EU leaders' summit in Brussels.

10.52am BST

And eurozone finance ministers are due to resume discussions on Saturday at 5pm Brussels time.

10.51am BST

Headlines flashing on Reuters:

The Greek prime minister Alexis Tsipras he told the German and French leaders that Greece could not understand the lenders' insistence on tough measures. Talks will continue after the EU leaders' summit ends around midday on Friday.

10.34am BST

Reuters is reporting, citing a source, that the European Central Bank's governing council decided on Friday to keep its emergency liquidity assistance for Greek banks - a crucial cash lifeline for the country - unchanged at a89bn for a third day. The ECB previously increased the programme steadily over many weeks. Click here for more context.

10.29am BST

In other Greek news...

Arkas, famous #Greek cartoonist, shuts down his FB pages with comics,after being bullied by @syriza_gr supporters. https://t.co/RMQEarNuIQ

The attack on #Greece's TOP cartoonist/satirist, ARKAS, should not pass as lightly. See previous RTs of @daphnenews to get context.

10.25am BST

Meanwhile, Greece's interior minister, Nikos Voutsis, has also been speaking. He told private ANT1 TV station:

The outcome largely depends on the way our partner will face the Greek issue. If they insist on a clear accounting approach, then apparently pessimism will prevail, but if the European leaders understand that Greece's problem is part of the whole picture of the European problems in which unity is a prerequisite, there will be optimism over the outcome of the negotiations.

In case of a failure to reach an agreement in the negotiations, both Greece and Europe will be found in unexplored waters.

10.21am BST

China says it is confident about the outcome of the Greece debt talks. Vice foreign minister Wang Chao told a news conference:

We have full confidence in how that will progress. Chinia would like to see Greece remain in the eurozone and appreciates the relevant parties' efforts in this regard.

We believe that the eurozone can, via the efforts of all parties, appropriately deal with the situation.

10.19am BST

And while we wait for more news from Brussels, here are some more thoughts on the sharp sell-off in the Shanghai stock market. Augustin Eden at Accendo Markets says there have been too many IPOs:

Big losses on the Shanghai Composite index extend[ed] into Friday's session following tremendous Chinese market rumblings on Thursday. A blistering bull run on the Chinese mainland looks set to end in the arena that, for the animals themselves anyway, spells imminent demise. 2015's market mania (with the Shanghai Comp. gaining a massive150%) has seen countless funds piling into Chinese equities encouraged by vast valuations, IPOs aplenty, confidence in economic stimulus and an explosion in margin-supported trading.

There've been too many IPOs, lenders are freaking out (tightening margin rates as a consequence), lofty valuations are being called into question and that ever elusive stimulus remains to be rolled out in any meaningful way. It's like rats leaving a sinking ship, and a terrible day for any investment trust dedicated entirely to long-term investments in mainland China.

10.15am BST

Here's Mike van Dulken again, head of research at Accendo Markets, on the likelihood of a relief rally on Monday.

Equities in the red accelerating their sell-off from late yesterday as we move into what is being billed as the last weekend for Greece to present acceptable reforms to its creditors to unlock the bailout-avoiding funds it desperately requires.

While another last-minute weekend agreement would surely mean a relief rally come Monday, continued stubbornness on both sides could equally take us into uncharted default/euro-exit territory and the accompanying uncertainty send markets lower. Gold continues to languish around $1170, failing to benefit from safe haven demand despite Greece being on the cup of default.

10.10am BST

Helena Smith in Athens reports that Tsipras has been in talks with the German and French leaders for about 25 minutes.

10.03am BST

People have been rushing to withdraw money from Greek banks, even before the dramatic events of the last fortnight. Deposits at Greek banks fell to their lowest level in almost 11 years in May, dropping nearly 3.7bn to 135.7bn, according to data from the European Central Bank.

9.55am BST

The Italian and Lithuanian leaders have both expressed their confidence that a Greece deal will be struck on Saturday, at the crunchiest of crunch talks.

Matteo Renzi, the Italian prime minister, said when he emerged from the European Council:

We support the efforts of Alexis Tsipras and his government to reach an agreement with the European institutions. At the same time, we are aware of how important it is for everyone that Greece remains in the eurozone. I estimate that Saturday is the final day and I am certain that we can reach an agreement.

9.50am BST

9.48am BST

Tsipras is on his way to talks with his German and French counterparts, media are reporting in Athens. Helena Smith writes:
The far left leader is on his way to the European Council, SKAI TV is reporting. Tsipras has repeatedly placed hopes in striking a deal at a higher level, bypassing euro group finance ministers who officials in Athens claim have been constantly stonewalled by Berlin's unyielding, pro-austerity finance minister Wolfgang Schiuble.

Speaking to Skai, Stelios Koulouglou, a euro MP with the ruling Syriza party, said the Greek government was still placing hopes in a "political" deal being reached.

There is an ongoing effort to clinch an agreement at a higher political level because further down there is the faction of Schauble who blocks [resolution].

9.44am BST

The three politicians are still in Brussels for the regular summit of European Union leaders.

9.41am BST

Alexis Tsipras, the Greek prime minister, is to hold talks with German chancellor Angela Merkel and French president Franiois Hollande on Friday, Reuters reports, citing a Greek government official.

9.39am BST

The Financial Times reports EU officials are preparing plans to "ringfence" Greece if talks fail on Saturday, including capital controls.

FT cites EU officials: they're readying plans to "ring fence" Greece if talks fail on Sat, including capital controls http://t.co/UEqZZmFDNF

Greek bankers tell me it is unthinkable there won't be a deal between Greece and its creditors http://t.co/HLJRWA1rfX

9.35am BST

You can listen to the Varoufakis interview on Morning Ireland here.

Varoufakis: when creditors insist on more austerity to tune of 2.5pc of gdp immediately it is impossible to do it without more taxes

9.31am BST

Varoufakis: there is nothing more sensible or common in the world of finance, whether it is private or public (ie ECB:ESM debt swap)

9.23am BST

Here are Varoufakis' comments in full, from his interview with Irish national radio RTE this morning. The Greek finance minister said that while Greece was determined to stay in the eurozone, Athens would not sign an agreement with lenders that it considered "unviable".

I am against increasing the corporate tax, but then again I am against raising the tax on hotels and against cutting the pensions of people who live below the poverty line.

These issues are putting me and my government in an impossible position, having to make a bad choice among really hard, difficult bad choices.

The Greek side has bent over backwards to accommodate some rather strange demands by the institutions. It is now up to them to come to the party.

So when I am asked to put my signature at the bottom line of an agreement which is clearly unviable, I am not going to do this.

8.59am BST

Over in Athens this morning the mood appears to have shifted yet again, reports our correspondent Helena Smith.

Last night, it was optimism that ultimately reigned with senior officials in Greece's governing Syriza party expressing the hope that a cash-for-reform deal was ultimately in sight.

There is a detectable shift in stance. Under pressure lenders have retreated on several issues.

On the basis of what things look like today the possibilities of an agreement are slim. Every time a solution is almost found and there is convergence, they come and say "bring us a few more pensioners to execute." What they are asking right now is tantamount to the suicide of an entire people.

8.50am BST

More thoughts on Greece. Angus Campbell, senior analyst at FxPro, says:

Another day passes with no deal on Greece and investors are likely to want to position themselves for negotiations to go on into the weekend by reducing exposure to risk assets. Indices are a little softer on the open and the euro is offered as we see yet another classic situation when it comes to the eurozone with things going down to the wire. Investors however remain optimistic that a deal will be struck ahead of next week's IMF payment deadline throwing Greece yet another lifeline.

If the expected deal does come over the weekend then investors will not be able to react until Monday and there could be disappointment if Greece is afforded just the extension to its existing bailout which will only fund the country through the summer. The political will that has so far kept the eurozone intact is being tested more than it has ever been before and is likely to be further. It's just a question of whether politicians and in particular Greece's creditors have the staying power.

8.48am BST

Whose round is it in the last chance saloon? ask Mike van Dulken and Augustin Eden at Accendo Markets.

While we might berate Greece for stringing things out, why wouldn't it do so until the last minute? Again. It knows exactly what the other side wants and can simply agree to just in the nick of time. Again. Until then, you never know what the purse-string-holders might concede, improving the final deal. The only risk is whether Greek depositors are prepared to hold out too. If they exit en masse they could force Tsipras' and Syriza's hand in terms of potential financial collapse.

8.43am BST

European stock markets are down this morning, as expected. The Athens market has lost 0.9% in early trading. The FTSE 100 index in London has lost more than 40 points, or 0.6%, to 6767.40. The Dax in Frankfurt has slid 0.5% to 11416.55, and the CAC 40 in Paris is 0.7% lower at 5007.61. The Ibex in Madrid has fallen 0.7% to 11250.30 while the FTSE MiB in Milan is down 0.5% at 23,534.17.

Craig Erlam, senior market analyst at Canadian foreign exchange firm OANDA, said:

By the time the markets reopen next week, Greece may have either secured a deal or accepted default to the IMF. With all this in mind, I expect to see significant risk aversion this morning with investors preparing for fireworks over the weekend.

8.35am BST

Yanis Varoufakis, the Greek finance minister, claimed this morning that his country had done everything it could to accommodate the "strange demands" made by its creditors, and was determined to remain in the eurozone.

However, Athens is still facing demands from its creditors that it cannot agree to, he said in an interview with Irish national radio RTE.

8.31am BST

European Commission president Jean-Claude Juncker has admitted that long hours of negotiations on Greece could be counter-productive.

We cannot take the right decisions when we are tired.

8.28am BST

Bernard Aw, market strategist at trading firm IG, said the "correction" in the Shanghai stock market is healthy in the long run, and China's central bank wants the market to be more stable.

It is probably not a bad idea to repeat my view that China's leaders still view a strong capital market as beneficial for the Chinese economy, more importantly, a stable bull market is desired.

8.18am BST

In Asia, stock markets sold off after another black Friday in China. The Shanghai stock market tumbled nearly 8%, dragging down other markets. Hong Kong's Hang Seng lost almost 2% while Japan's Nikkei was more resilient, dipping 0.3%.

The Shanghai Composite has surged 124% over the past year and analysts believe its 935 day bull run has peaked, amid rising uncertainty about whether the government will continue to ease policy to boost the economy.

This is probably not a dip to buy. In fact, we think the balance of probabilities is that the top for the cycle on Shanghai, Shenzhen and the ChiNext has now taken place.

7.59am BST

Meanwhile, Jasper Lawler, market analyst at CMC Markets UK, says:

German chancellor Angela Merkel has said Saturday's Eurogroup meeting would be of "decisive importance." Perhaps a wider concern for markets is that each day the institutions lose more credibility when these arbitrary "final" deadlines gets missed.

It doesn't look too hopeful that an agreement will be reached on Saturday. Pensions are still a sticking point that neither side wishes to give into. That said, nobody wants to be left holding the smoking gun of Greece's default and exit from the euro. It seems likely that another arbitrary extension date will emerge before June 30, when Greece's current bailout runs out.

7.57am BST

Good morning and welcome back to our coverage of the eurozone (Greece) debt crisis and other economic developments.

Following Thursday's 24-hour negotiating marathon, European politicians will be working frantically on a deal between Greece and its international creditors, before talks between eurozone finance ministers resume on Saturday.

Every member of the European Council [EU leaders] strongly supported that every effort has to be made to bring about a solution.

JPM on #Greece: Without a deal by Sunday evening, the Greek Banks will not open on Monday, and capital controls will be introduced.

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title
Feed Link	http://feeds.theguardian.com/