Markets surge ahead of summit
BRUSSELS — Markets surged on hopes for a breakthrough at a summit to be held today to keep Greece from defaulting and falling out of the currency union. However, a top European Union official cautioned against excessive optimism.
With Greece facing the risk of defaulting on its debt as soon as next week, the country and its creditors are holding an emergency meeting to find an agreement on the conditions for more loans.
The talks have dragged on for months and are reaching a breaking point, with the country facing a debt repayment on June 30 it cannot afford without more loans. Worried Greeks, meanwhile, are pulling money out of banks in growing amounts.
Ahead of the meeting, Greek Prime Minister Alexis Tsipras made new proposals on what economic reforms and cuts his country would accept in exchange for the loans.
European Commission President Jean-Claude Juncker acknowledged the proposals were a sign of progress but warned that “we are not yet there.”
Heading into a meeting with International Monetary Fund, the European Central Bank and EU leaders, Tsipras said after four months of slow and unsuccessful negotiations that put the global financial system on edge it was “time for a substantial and viable solution.”
No details of the proposal were made public, but investors were hopeful it represented a long-awaited compromise. The Athens stock index was up 8.2 percent while Stoxx 50 of top European shares was 3.1 percent higher.
Despite the market rally, tension was palpable in Greece, where people flocked to cash machines to withdraw money. The concern is a debt default by Greece could destabilize the country enough that it might have to eventually leave the euro.
To support Greek banks in the face of growing money withdrawals, the European Central Bank increased the amount of emergency credit it allows the banks to draw on to remain afloat, a banking official said.
The official, who spoke only on condition of anonymity because the ECB decision had not been made public, said the ECB remains on call in the coming hours and days to revise the amount of credit to Greek banks, should that be necessary.
