Stock markets falter as Greek debt talks intensify

A Greek delegation is to submit counterproposals to Athens' creditors in Brussels on Saturday, in a bid to find common ground in negotiations that appear to be moving from one snag to the next, according to a Greek official speaking on condition of anonymity.

The counterproposals would attempt "to bridge the remaining differences" in negotiations, the official said, adding that, "We are more than ever closer to an agreement."

In a sign that negotiations are increasing in intensity ahead of June 18 - when EU finance ministers meet in Luxembourg - the official said Greek Prime Minister Alexis Tsipras had spoken to European Commission President Jean-Claude Juncker by phone to discuss next steps.

The new urgency comes after a decision late on Thursday by the International Monetary Fund (IMF), one of Athens' international creditors, to pull its negotiators out of talks in Brussels, saying the sides were "well away from an agreement."

Juncker later downplayed the decision, saying it did not mean the IMF was giving up hope.

German Finance Ministry spokesman Martin Jäger also described the IMF's move as being mainly "a warning to the Greek side to intensify the talks."

Contrasting views

Greek Finance Minister Yanis Varoufakis has also expressed optimism about a positive outcome to talks, telling British broadcaster BBC on Saturday that Athens did not believe any European officials wanted Greece to exit the eurozone.

However, Athens' upbeat assessment seems to contradict the view of Greece's eurozone partners, who are said to be preparing for the possibility of a Greek default.

If Greece does not achieve a deal by the end of June, when its 240 billion-euro ($270 billion) bailout expires, it risks going bankrupt and being forced to leave the common euro currency. An agreement to unlock the last 7.2 billion euros of the bailout is needed by the June 18 meeting to give national parliaments time to approve it by June 30.

So far, negotiations have stalemated over Athens' refusal to agree on economic reforms demanded by the creditors. Tsipras' government rose to power earlier this year on pledges to end bailout-related austerity measures.

Stock market unease

Amid the increasing fears of Greek bankruptcy, US stock markets dropped across the board on Friday.

All 30 companies in the Dow Jones industrial average and all 10 in the Standard & Poor's 500 index finished with modest losses, though the S&P still managed a 1-point gain for the week despite slipping 0.7 percent at the close of trading.

This came after S&P lowered the rating of Greece's four big banks further on Friday, downgrading Alpha Bank, Eurobank, the National Bank of Greece and Piraeus Bank from CCC+ to CCC.

"The downgrade reflects our view that Greek banks will likely default within the next 12 months in the absence of an agreement between the Greek government and its official creditors, while the end of the current program is approaching," the ratings agency said.

It said panicked Greeks had withdrawn 20 percent of total deposits - around 35 billion euros ($40 billion) - from Greek banks between the end of November 2014 and the end of April 2015.

Major European indexes also took a blow on Friday, with Greece the worst-affected.

The main Athens index was down 6 percent, Germany sank 1.2 percent, and the CAC-40 in France lost 1.4 percent. Britain's FTSE 100 finished 1 percent down.

tj/jr (AFP, dpa, AP, Reuters)