|
 Ministers were traveling to Frankfurt, Brussels and Paris to plead
for a loosening of the financial stranglehold on Athens after
leftist Prime Minister Alexis Tsipras spoke by telephone to German
Chancellor Angela Merkel, Europe's pre-eminent leader.
"They discussed the course of the negotiations in Brussels and
exchanged views on the issues of Greece's deal with its lenders," a
Greek government official said of the call on Monday night, without
elaborating.
Intensive talks continued with the International Monetary Fund,
European Commission and European Central Bank on a cash-for-reform
deal but there was no sign of a breakthrough on key differences over
pensions, labor reform and the minimum wage.
In a goodwill gesture, a senior privatization official said Athens
was ready to finalize a 1.2 billion euro deal with German operator
Fraport to run regional airports and to reopen bidding for a
majority stake in the port of Piraeus.
 European Economics Commissioner Pierre Moscovici said the aim was
for euro zone finance ministers to be able to officially register
"strong progress" in the negotiations when they meet next Monday but
did not suggest a deal was possible by then.
The political uncertainty prompted the Commission to slash its
forecast for 2015 Greek economic growth to 0.5 percent from 2.5
percent just three months ago. It also cut its estimate for Greece's
primary budget surplus before debt service.
"The fact that negotiations are still going on without having been
concluded after more than 3-1/2 months, all that has an impact on
expectations for growth and public finances in Greece," Moscovici
told a news conference.
FUNDING CRUNCH
Greek Deputy Prime Minister Yannis Dragasakis was due to meet ECB
chief Mario Draghi in Frankfurt to urge the central bank to increase
a liquidity lifeline for Greek banks and permit them to buy more
short-term treasury bills, easing the government's immediate funding
crunch.
Greece has to repay 970 million euros to the IMF by May 12 and has
commandeered cash reserves from municipalities and government bodies
to scrape together the funds.
ECB policymakers will hold their weekly review of emergency lending
assistance (ELA) to Greek banks on Wednesday amid pressure from
hardliners led by Germany's Bundesbank to tighten the collateral
terms, ECB sources said.
Pointing to recent credit rating downgrades of Greece and its banks,
the hawks want the ECB to increase the "haircut" on Greek securities
that banks present as collateral for funding.
 But an ECB source said he did not expect the council to make a
dramatic change that would put Greek banks in immediate difficulty
while negotiations are continuing.
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Investors shed Greek bonds and stocks on Tuesday after the Financial
Times reported that the IMF's European chief Poul Thomsen had
threatened to cut a funding lifeline to Greece unless its European
partners agree to a debt write-off.
A source briefed on the IMF's position said Thomsen had not
explicitly made such a threat or called for a debt write-off when he
met euro zone finance ministers in Riga on April 24, but had
highlighted Greece's deteriorating debt sustainability.
"The IMF of course did not make such a comment," German Finance
Minister Wolfgang Schaeuble echoed on Tuesday, adding that Thomsen
had said things "had become more difficult".
Greek Finance Minister Yanis Varoufakis, sidelined by Tsipras from
the negotiations after alienating his euro zone colleagues, met his
French counterpart, Michel Sapin, in Paris and was due to see
Moscovici later in Brussels.
Moscovici stressed the Commission's goal was to keep Greece in the
euro zone and avert what he called an "accident".
While Germany and its allies have pointed to calm in bond markets to
suggest that a Greek default or exit from the euro zone would not
cause a wider financial meltdown, as it might have done in 2012,
other EU countries are more concerned.
Italian Foreign Minister Paolo Gentiloni warned against belittling
the risks of a possible "Grexit".
"Italy's government considers it short-sighted and dangerous to
underestimate the Greek crisis," Gentiloni told reporters, adding
that the idea of a Greek exit from the euro zone could not be taken
lightly.
(Additional reporting by Karolina Tagaris and Deepa Babington in
Athens,; Michael Shields and Angelika Gruber in Vienna and Elvira
Pollina in Milan; Writing by Paul Taylor; Editing by Catherine
Evans)
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