Euro zone sets emergency limits for Greece

Euro zone leaders will hold an emergency summit on Monday to try to avert a Greek default after bank withdrawals accelerated and government revenue slumped as Athens and its international creditors remain deadlocked over a debt deal, Reuters reported.

Finance ministers of the 19-nation currency bloc failed to make any breakthrough on a cash-for-reforms agreement at talks in Luxembourg on Thursday, just 12 days before Greece must make a crucial debt repayment to the International Monetary Fund.

"Regrettably ... too little progress has been made. No agreement is in sight," Jeroen Dijsselbloem, chairman of the Eurogroup, told a news conference. Ministers sent a strong signal that it is up to Greece to make new proposals, he said.

The European Central Bank told the meeting it was not clear whether Greek banks would be open on Monday, officials said.

The ECB's governing council will hold a special conference call on Friday - the second in three days - to consider adding more emergency liquidity for Greek banks facing a quickening drain on their cash, two persons close to the situation said.

European Council President Donald Tusk said in a statement he had summoned heads of state and government of the euro area to meet in Brussels at 1700 GMT on Monday to discuss Greece "at the highest political level".

IMF Managing Director Christine Lagarde said further dialogue was needed "with adults in the room".

Greece said it had put a "radical proposal" for budget monitoring on the table to show its willingness to reach a deal, Finance Minister Yanis Varoufakis said.

He accused his European peers of being dangerously close to accepting "an accident", saying they had refused to discuss his idea for braking public spending.

Dijsselbloem said if there was a last-minute deal next week, there would have to be some extension of the current bailout to allow time for disbursement.

Greek savers pulled out some 2 billion euros between Monday and Wednesday after weekend negotiations collapsed in Brussels, senior banking sources told Reuters. That is double the amount that the ECB granted Greek banks in extra emergency liquidity assistance (ELA) only on Wednesday.

Greece said on Wednesday that the government does not have the money to repay the IMF loan, which is the first in a series of debt repayments over the summer.

German Chancellor Angela Merkel said a deal was still possible to provide Greece with additional funds, if Athens showed the necessary will.

But Tsipras - pointedly visiting Russia at a time of sour relations between Moscow and the EU - insisted creditor demands for pension cuts would worsen the economic crisis.

In a guest column for Der Tagesspiegel newspaper in Berlin, he sought to dispel what he called a "myth" that German taxpayers were paying Greek pensions and wages.

"The blind insistence of cuts (in pensions) in a country with a 25 percent unemployment rate and where half of all the young people are unemployed will only cause a further worsening of the already dramatic social situation," he said.

A combination of a default and capital controls could set Greece on a path out of the euro zone and even the EU itself, the Greek central bank warned this week. It would be the first country to leave the currency area or the Union.

For its part, Russia quashed speculation that President Vladimir Putin - at loggerheads with the West over Ukraine - would ride to Greece's rescue. A deputy finance minister told Reuters there had been no request
for money from Greece, and Russia had no resources for such a bailout.

Financial markets reflected growing alarm about the risk of a Greek default. European shares fell and Greek shares .ATG hit a new three-year-low.

In a sign of growing nervousness among many Greeks about their country's fate, pro-euro demonstrators planned a rally in central Athens, calling for an end to the deadlock. The previous day, anti-austerity protesters rallied in support of the government and against policies set by lenders.

"I'm still convinced: where there's a will, there's a way," Merkel told German lawmakers. "If those in charge in Greece can muster the will, an agreement ... is still possible."

Merkel faces growing resistance in her ruling conservatives to granting Greece any more bailout money. A narrow majority of Germans now favour Greece leaving the euro zone.