Greek Prime Minister Alexis Tsipras (left) is welcomed on Monday by European Commission President Jean-Claude Juncker ahead of a summit in Brussels. [Photo/Agencies]
Eurozone finance ministers broke off talks on Monday without an agreement on Greece's bailout.
They said they aimed to reach a deal later this week that might keep the country from defaulting and falling out of the currency union.
The lack of a result left a summit of government leaders later in the day with few prospects of making any concrete decisions on the country's crisis.
Greece needs more loans from its creditors, which include its fellow eurozone states and the International Monetary Fund, in time for June 30, when it faces a debt repayment it cannot afford.
The country has been negotiating for four months on the economic reforms it should make to obtain the money.
Ahead of the meetings in Brussels, German Chancellor Angela Merkel and other European officials had warned against expecting too much on Monday.
Markets rallied strongly in the morning on hopes that new proposals for reforms submitted by the Greek government over the weekend would pave the way for a deal.
Those gains faded somewhat as it became clear that a deal would have to wait a little longer. After trading 8 percent higher earlier, the main Greek stock index was up by about 5 percent. The Stoxx 50 index of major European shares was up by 2.9 percent.
European Union leaders begin a two-day summit on Thursday, and there are hopes that a full agreement can be reached then.
Jeroen Dijsselbloem, the Dutch leader of the eurozone finance ministers' meetings, said negotiators would be using proposals made over the weekend by Greek Prime Minister Alexis Tsipras as a basis for further talks. "It's an opportunity to get that deal this week," he said.
Despite the upbeat mood in the markets, tension was palpable in Greece, where people flocked to cash machines to make withdrawals. They fear a debt default could destabilize the country to the extent that it might have to eventually leave the eurozone.
The country's latest proposals to reach a debt deal are focused on value-added tax rates, early retirement measures and tax increases, which aim to cover a large part of the nation's budgetary gap, Greek media reported on Monday.
The new proposals seek to close a gap of 900 million euros ($1.02 billion) between the creditors' demands for savings in next year's budget and the last offer Greece's leftist government made, which was rejected, according to the financial daily Naftemporifi.
