The Latest: European Central Bank caps Greek bank credit

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Posted: Jul 13, 2015 9:41 AM
The Latest: European Central Bank caps Greek bank credit

BRUSSELS (AP) — The latest from Greece's financial crisis (all times local):

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3:35 p.m.

The European Central Bank has decided against letting Greek banks draw more emergency credit — for now.

A bank spokesman said Monday that emergency liquidity assistance "was maintained at its current level" following a teleconference of the bank's governing council.

The bank's refusal to increase the level of emergency credit above the current 89 billion euros ($98.3 billion) forced Greek banks to close two weeks ago and limit withdrawals to 60 euros ($67) per day.

The ECB has held off turning the credit tap back on pending a bailout deal that would restore the government's finances.

Analysts say the bank may permit Greek banks to borrow again once the Greek parliament votes to approve reforms that would pave the way for a third multibillion-euro bailout deal.

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2:55 p.m.

Greece's pro-European opposition parties have indicated they still back left-wing Prime Minister Alexis Tsipras, who is likely to need their help to rush a new austerity package through Parliament this week.

Conservative opposition leader Vangelis Meimarakis says "Greece can catch its breath, so that with sobriety and responsibility it can try to find its step in Europe again."

Dissent over the deal Greece made with creditors Monday is threatening Tsipras' coalition government, since it does require tax increases and pension changes. Some leftist lawmakers from his ruling Syriza party are calling the agreement the "worst deal possible ... (since it) maintains the country's status: a debt colony under a German-run European Union."

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2:35 p.m.

As negotiations over the Greek bailout dragged on, the hashtag #ThisIsACoup has been trending on Twitter — a gathering place for those complaining about Germany's and other creditors' perceived harshness toward Greece.

Germany was the most prominent of the European nations pushing for tough conditions for any new financial aid to Greece. But German Chancellor Angela Merkel's spokesman is dismissing those hostile Twitter comments and the hashtag as "completely unfounded."

Spokesman Steffen Seibert on Monday rejected suggestions that the country had sought to humiliate Greece. He noted the agreement was reached by all 19 nations who share the common euro currency and said: "The chancellor and the whole German government are acting out of European conviction and in European responsibility."

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2:20 p.m.

Greece's small left-wing anti-capitalist Antarsya party is calling for a demonstration Monday night outside parliament in Athens against Greece's new bailout.

The party says "the hours are critical" for those who favor left-wing policies.

After months of acrimony, Greece finally clinched a bailout agreement with its European creditors on Monday that will secure the country's place in the euro and avoid financial collapse. The terms, however, will be painful for Greeks.

Before it can get 85 billion euros ($95.1 billion) in bailout cash and support for its banks to reopen, the Greek government will have to pass a raft of austerity measures that include sales tax increases and pension and labor reforms.

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1:30 p.m.

The speaker of Germany's parliament says lawmakers could vote Friday on a new bailout deal with Greece.

The German government must get a parliamentary mandate to formally open negotiations with Greece on financial aid after an agreement was reached Monday. The German government will have to return to parliament to get lawmakers to approve a final deal.

German parliament speaker Norbert Lammert says he could imagine a parliamentary session being held Friday morning, news agency dpa reported. The Greek government will first have to put a set of measures through its own parliament by Wednesday, as demanded by the country's eurozone partners.

Germany's parliament is currently on its summer recess and will have to be recalled for a special session.

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1:15 p.m.

Germany's vice chancellor is acknowledging that Greece faces tough conditions to get a new bailout but says it would have been irresponsible to grant one without them.

Greece and its creditors agreed early Monday on a deal that will keep the country in the euro common currency. The deal still needs approval from the Greek parliament.

Sigmar Gabriel says Germany and France, the eurozone's two biggest economic powers, played a big role in making it possible for Greece to stay in the eurozone.

Gabriel's center-left Social Democrats have tended to talk less tough on Greece than Chancellor Angela Merkel's conservatives but Gabriel says a hard stance was necessary. He said that "without these hard conditions it would not have been responsible to launch such a large financial aid package."

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1 p.m.

Greeks seem to be taking the agreement their government reached with its creditors and its accompanying harsh measures in stride. Many say they understand more pain is on the way but that it is far better than an alternative that would have pushed Greece out of the Eurozone.

Periklis Stinios, a 38-year-old lawyer walking through Athens' central Syntagma Squre, described the deal as "a historic opportunity ... for the young generation. Because the previous ones didn't manage to rise to the occasion."

Panagiotis Toutsidis, a retired private sector employee, says the Greek people got what they were expecting, which was a deal. He says it's much better than a Grexit and that the country is used to such measures.

Kostas Lambos, a retired economist, said things would be "difficult in the beginning" until people understand that "this was a necessary step for the country to emerge from the dead ends that had been created in the last few years."

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12:30 p.m.

German Foreign Minister Frank-Walter Steinmeier says the agreement with Greece shows that Europe "can act in a united fashion, in solidarity and rationally."

He says "some difficult steps" remain, particularly by Greece, which has to work on re-establishing credibility.

Still, he says that the agreement reflects Europe's readiness to reach political compromises, "a characteristic that formed a peaceful and prosperous union from a fragmented continent after World War II."

Steinmeier spoke on the sidelines of the Iran nuclear talks in Vienna.

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10:55 a.m.

French President Francois Hollande has hailed the agreement reached by eurozone leaders on Greece after marathon talks as a good deal for Greece and its European partners and creditors.

Hollande told reporters that, "Even if it was long, I think for Europe this was a good night, and a good day."

The French president, who had dispatched government functionaries to help Greece write reform proposals that would satisfy a more skeptical Germany, says one of the objectives of the emergency summit was to restore hope for the Greek people.

He says Greece hadn't been looking for "welfare" from other European countries, but for a program that would help its economy grow.

Hollande says that to allow Greece to exit from the 19-nation eurozone would have been to lose a country that is "at the heart of our civilization." He adds that failure to reach an agreement would have undermined the credibility of efforts to construct a more united Europe.

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10:45 a.m.

Greek Prime Minister Alexis Tsipras says the country's new bailout program should persuade markets that a Greek exit from the euro "is an issue of the past."

That, he said, would lead to investments returning to Greece and balancing out the recessionary measures that the deal includes.

Tsipras says, "The decision today keeps Greece in conditions of financial stability, it gives the possibility of recovery. At the same time though, we knew from before, that it would be an agreement whose implementation is difficult."

But he promises the burdens of the new agreement would be fairly shared and vowed to fight the "oligarchy" in his country.

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10:25 a.m.

Stock markets across Europe have spiked higher as investors breathe a sigh of relief that months of discussions have yielded a bailout agreement for Greece.

Germany's DAX was 1.2 percent higher while the CAC-40 in France rose by 1.6 percent. The Stoxx 50 index of top European shares was up 1.7 percent.

Craig Erlam, senior market analyst at OANDA, said markets responded positively to the news as it helps ease concerns that the country was heading for a "messy exit" from the eurozone.

Worries over so-called Grexit and what it could do to the fragile global economic recovery have weighed on stock markets this year.

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10:20 a.m.

Greek Prime Minister Alexis Tsipras says his country fought "a difficult battle" for the past six months to win a financial aid agreement that will allow his country "to stand on its feet".

He says: "We found ourselves before difficult decisions, tough dilemmas. We took the responsibility of the decision in order to avert the implementation of the more extreme aims (of) the more extreme conservative circles in the European Union."

He says Greece managed to resist a request that Greece transfer public assets abroad as well as a "plan of financial suffocation and the collapse of the banking system," which he said had been "planned down to its last detail recently" and had already started to be implemented.

Tsipras stresses Greece won concessions on restructuring Greece's debt and assured medium-term financing.

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10:05 a.m.

German Chancellor Angela Merkel says a preliminary bailout deal for Greece is predicated on the country asking for further help from the International Monetary Fund.

Greece has a bailout program with the IMF that will expire in the spring of next year.

Merkel says Greece's European creditors have agreed to a Greek bailout in which "Greece will ask, after the current IMF program expires in spring 2016, for further participation of the IMF."

The deal was greeted in markets as removing an immediate threat that Greece could collapse financially and leave the euro, with uncertain consequences for markets and the economy.

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9:50 a.m.

German Chancellor Angela Merkel says the eurozone is open to the idea of giving Greece some debt relief but she has ruled out an outright cut in the country's debt level.

Speaking after an agreement to start bailout negotiations with Greece, Merkel said the eurozone "is prepared, if it becomes necessary, to take additional measures" to ease Greece's debt burden.

She noted that the eurozone could give Greece "a longer grace period." A direct cut though is not an option, she added.

Merkel insisted that no relief will come until after "the first successful assessment of the new Greek program."

Merkel said she recommended the start of negotiations with the cash-strapped country with "full conviction" but stressed that trust with Greece "needs to be rebuilt."

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9:20 a.m.

European Union President Donald Tusk says the agreement with creditors struck Monday morning will allow Greece to "get back on track."

Officials including European Commission chief Jean-Claude Juncker say the deal means that Greece will not have to leave the euro currency, the so-called Grexit.

French President Francois Hollande says the Greek parliament should convene within hours to adopt new reforms, and has praised the fact that the deal should keep Greece in the euro.

For the eurozone to have lost Greece as a member would have been to lose "the heart of our civilization," Hollande said.

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9:10 a.m.

European Union President Donald Tusk says the bailout deal for Greece could pave the way for the country to remain a member of the euro.

In a tweet Monday, Tusk said eurozone leaders agreed unanimously on a new bailout for Greece that includes "serious reforms" and "financial support."

Details of the agreement between Greece and its creditors have yet to emerge.

The Greek government made a request last week for a three-year, 53.5 billion-euro ($59.5 billion) financial rescue from Europe's bailout fund. During negotiations that stretched beyond a weekend deadline into Monday morning, Its creditors indicated that Greece will need tens of billions more than that to stay solvent.

Greece's economy is in freefall and its banks are facing collapse.

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9 a.m.

Summit chair Donald Tusk says eurozone leaders have unanimously agreed on a bailout deal for Greece. In a tweet Monday, Tusk said the European bailout program for Greece includes "serious reforms" and "financial support."

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8:35 a.m.

The European Union's top economy official says he's hopeful for a deal to keep Greece in the euro — and that the German and French leaders will be at the center of it.

Pierre Moscovici played down ideological differences among Greece's European creditors on Monday, telling France's RTL radio that the marathon overnight negotiations show there is a "shared willingness to ensure that Greece remains in the euro."

Earlier in the negotiations there had been indications of splits among the European countries, with German Chancellor Angela Merkel demanding tough conditions before releasing aid while French President Francois Hollande prioritized unity among the nations that use the euro.

Moscovici said Merkel and Hollande have "solid and direct" relations despite ideological differences and that "there is no solution for Europe" without agreement between the eurozone's two leading powers.

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8 a.m.

Greece and its creditors may be working past their self-imposed deadline, but currency traders don't seem too alarmed about the uncertainty in the eurozone.

The euro was up 0.2 percent Monday at $1.1140.

Craig Erlam, senior market analyst at OANDA in London, said investors appear fairly optimistic that the two sides will soon strike a deal, at least in principle.

He says that with Greek banks on the verge of collapse, "the country really has run out of time."

Greece's banks have been closed for two weeks and cash-machine withdrawals have been limited to 60 euros a day as the European Central Bank rejected calls to increase the amount of emergency liquidity for Greek banks. Many believe they will run out of cash this week.

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7:35 a.m.

Talks aimed at securing Greece's future in the euro have dragged into Monday with few signs that a meeting of the 19 leaders of the eurozone is coming to an end.

More than 15 hours after they started their discussions, Greek Prime Minister Alexis Tsipras appears to be holding out against two demands from his creditors: one related to the involvement of the International Monetary Fund in any bailout agreement, and the other a proposal that Greece set aside 50 billion euros ($56 billion) worth of state-owned assets in a fund for eventual privatization.

Summit chair Donald Tusk has presented a "compromise proposal," details of which remained sketchy Monday morning.

Any deal would see Greece accepting more austerity in exchange for a bailout to prevent its economy from collapsing.