Greek drama nears final act, ending uncertain

Sun Jun 21, 2015 5:06am EDT
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By Jonathan Cable

LONDON (Reuters) - Euro zone leaders will attend an emergency summit on Monday, hoping to thrash out a plan with Athens to provide Greece with additional funds to prevent it defaulting on its debt -- but only if both sides play ball.

With the outcome uncertain, markets will also be looking at data due on Tuesday for clues as to how the global economy rounded off the first half, with business surveys expected to show modest growth in China, the euro zone and the United States.

If Greece does default on its debts, which remains a real possibility, it could require capital controls that would potentially turf it out of the euro zone or even the European Union itself, becoming the first country ever to leave the bloc.

Athens said last week it did not have the cash to repay an International Monetary Fund loan so Greek Prime Minister Alexis Tsipras only has until the end of the month to strike a deal with creditors.

"We've had deadlines and more deadlines, and none of them actually turned out to be final, but now we're approaching what is going to be a final deadline," said Sonja Marten, FX strategist at DZ Bank in Frankfurt.

IMF boss Christine Lagarde closed one of Tsipras' last potential escape hatches on Thursday, declaring the global lender would consider Athens in default if it misses the June payment, despite some reports there might be some leeway.

Voted into power in January on a pledge to roll back austerity amid mass unemployment and an economy in freefall, Tsipras' government has so far balked at demands from creditors for new pension cuts and tax hikes on basic goods like food and electricity.

"There are dim hopes amidst an active rumor mill that on balance continues to portray both Greek PM Alexis Tsipras and his main banker German Chancellor Angela Merkel as uncompromising," said Derek Holt at Scotiabank.   Continued...

A protester waves a Greek flag at the entrance of the Greek parliament, during a rally calling on the government to clinch a deal with its international creditors and secure Greece's future in the Eurozone, in Athens, June 18, 2015. REUTERS/Yannis Behrakis