Greek markets jump on renewed hopes for bailout deal
BRUSSELS - Hopes of progress in Greece's longstanding bailout talks grew on Thursday after German Chancellor Angela Merkel said Athens had committed to resolve the impasse with creditors in coming days to gain access to rescue loans.
Stock markets rallied, particularly in Greece, as officials sounded optimistic that a deal, which has remained elusive for four months, could be reached in time for next week's meeting of eurozone finance ministers.
The creditors have made clear that Greece must improve an offer of reforms it would introduce in exchange for 7.2 billion euros ($8.1 billion) in bailout loans it needs to repay debts due at the end of the month.
Merkel said that in overnight talks with Greek Prime Minister Alexis Tsipras a clear consensus emerged that "Greece will now work emphatically and at full steam with the three institutions in coming days to try to clear up all the outstanding issues."
Merkel expressed "hope that the necessary progress can now be made," and underlined that "each day counts."
Though such optimism has often in the past come to nothing, it was enough to trigger a big market jump in Greece. The Athens stock exchange rose 7.1 percent in midday trading on hopes of an impending deal. European markets were up too, with the Euro Stoxx 600 index gaining 0.5 percent.
EU Commission President Juncker said it was time for a vital push.
"You have to get the cow off the ice, where it keeps on slipping. We are trying to push it off again now," Juncker said ahead of a new bilateral meeting with Tsipras Thursday afternoon.
After his talks overnight with Merkel, Juncker and French President Francois Hollande, the Greek premier said: "We decided to intensify the effort to bridge the remaining differences."
The lack of progress in the negotiations over the past weeks has revived fears Greece could default on its debts and drop out of the euro, a move that would create huge uncertainty for Europe and global markets.
The head of Germany's central bank, Jens Weidmann, said time is running out for a deal, and the risk of insolvency is increasing by the day.
"The contagion effects of such a scenario are certainly better contained than they were in the past, though they should not be underestimated," he said in a speech in London. "But the main losers in that scenario would be Greece and the Greek people."
Amid the uncertainty, Greece's economy has slipped back into recession, while figures released Thursday showed that unemployment grew again in the first quarter, reaching 26.6 percent -- compared to 26.1 percent at the end of last year.
A deputy health minister, Andreas Xanthos, warned that Greece's under-staffed, under-funded public health system faces "very serious problems" at the end of the year unless a bailout deal can be struck soon.
Piling new pressure on Athens, Standard & Poor's in New York downgraded Greece's credit rating one notch further into junk territory on Wednesday, saying it's likely the country will default on its commercial debt within a year if it can't strike a deal.
Another ratings agency, Moody's, noted that while Greece's problems were mounting, there appeared to be little impact on the markets of other eurozone states, even the economically weaker ones.
Finance ministers from the 19 nations using the euro currency will meet in Luxembourg next Thursday, less than two weeks before Greece's bailout program expires and it has a big debt repayment due.