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 Hours ahead of the crunch talks in Brussels, a senior Greek
official said a deal was close. Germany said Greece's latest
proposal was a "good signal" although it did not go far enough in
its present form.
The Greek official, speaking on condition of anonymity, said Athens
had made a lot of concessions to reach an agreement and the euro
zone should show some flexibility too.
"We have covered four fifths of the distance, they also need to
cover one fifth," the official said, adding Greece wanted to clinch
a deal on Friday, but that it would not back down in the face of
pressure from the Eurogroup.
A spokeswoman for German Chancellor Angela Merkel said the latest
Greek request for an extension of its loan agreement with Europe was
a good signal and provided a basis for further talks, but was not
sufficient in its current form.
Spokeswoman Christiane Wirtz however sent a more conciliatory
message than Finance Minister Wolfgang Schaeuble had on Thursday,
when he rejected the proposal from his Greek counterpart Yanis
Varoufakis.
"The letter from the Greek finance minister makes clear that Greece
remains interested in support from the European Union," Wirtz said.
"This letter is a good signal which allows us to continue to
negotiate."
She said the euro zone finance ministers' talks would "hopefully
lead to an agreement with Greece."
AUSTERITY
Germany and the new radical leftist-led government in Athens have
squared off over demands that Greece stick to strict austerity
conditions in its international bailout program.
The 240 billion euro bailout expires at the end of this month and
Greece could run out of money by the end of March without new
external funds, people familiar with the figures say, driving it
nearer to the euro zone exit.
Adding to pressure to reach a deal, Greek savers withdrew their
money from the banks at an accelerating pace despite government
assurances that there is no plan to introduce capital controls to
stem the outflows.
Deposit outflows rose to over 1 billion euros over the past two
days, some of the highest daily levels seen this year, two senior
banking sources told Reuters.
Greeks are nervous ahead of a three-day weekend, given memories of
capital controls imposed on Cyprus in 2013 over a long weekend, a
senior banker said. Monday is a market holiday.
Government spokesman Gabriel Sakellaridis said Greece had done all
it could to find a mutually beneficial solution.
"We are not discussing the continuation of the (bailout) program,"
he told Mega TV. "The Greek government will maintain this stance
today, although conditions have matured for a solution to be found
at last."
Greek Prime Minister Alexis Tsipras, elected last month on a
platform of scrapping the bailout, says austerity has strangled his
country's economy and caused a humanitarian crisis.
Diplomatic efforts to avert a breakdown that could cause turmoil in
world financial markets intensified, with German Chancellor Angela
Merkel and Tsipras holding their first substantive telephone call on
Thursday.
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French President Francois Hollande, one of several EU leaders trying
to mediate, told Tsipras he would work on Merkel when they meet in
Paris on Friday, a Greek official said.
U.S. Treasury Secretary Jack Lew weighed in to urge compromise in
calls to his Greek, Dutch and French counterparts.
Washington, sympathetic to Greek demands for an easing of austerity,
is worried that a breakdown in talks could affect an already weak
global economy.
The German member of the European Commission, Guenther Oettinger,
said he believed Greece and its creditors should be able to reach a
deal but it might take another meeting of euro zone leaders next
week.
"We are working so that Greece stays in the euro zone," Oettinger
told Deutschlandfunk radio. "On this basis I think an agreement will
still be possible in the next eight days -- if necessary via a
further meeting of government leaders."
DEADLINE?
Eurogroup chairman Jeroen Dijsselbloem has said this Friday is the
deadline for Greece to reach a deal since any extension or change to
the bailout agreement that expires on Feb. 28 would have to be
approved by several national parliaments.
However, EU deadlines often slip and Merkel has in the past agreed
financial rescues only at the very last moment when she could tell
Germans the future of the euro zone was at risk.
Berlin is Greece's biggest creditor, owed 50 billion euros as its
share of the EU/IMF bailouts. As Europe's biggest economy, it would
take a hit in the turmoil that might ensue if Greece defaulted and
left the euro area.
However, whether for tactical reasons or out of deep exasperation
with Athens, Berlin has conveyed the message that a Greek exit,
while not desirable, would be manageable. German Finance Minister
Wolfgang Schaeuble, who has taken the hardest line, has pointed to
calm on world markets this week.
European shares inched up on Friday, trading close to Thursday's
seven-year high, but borrowing costs for peripheral euro zone
governments also rose in a sign of uncertainty about the outcome
with Greece.
(Writing by Paul Taylor; Editing by Giles Elgood)
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