Greek Crisis: Merkel Offers Olive Branch

Germany has relaxed its fierce opposition to an easing of the bailout demands faced by Greece, though there are no signs a new deal is imminent.

German Chancellor Angela Merkel offered an olive branch at a summit of EU leaders in Brussels after the country's biggest creditor had previously ruled out writing off debt or allowing a relaxation of austerity.

She told reporters: "Europe always has been geared towards finding compromises. Compromises are agreed when the advantages outweigh the disadvantages. Germany is ready for this."

The new Greek government - led by prime minister Alexis Tsipras - rose to power on the back of anger at the rescue deal among Greeks that it was killing off any chance of economic recovery.

Its economy is around 25% smaller than it was before the crisis and poverty and unemployment have swelled, with the youth jobless rate above 60%.

Merkel has been the key cheerleader for austerity, fearing that any relaxation of the €240bn bailout's terms would send a signal to other heavily indebted nations that they could divert from reforms.

It was confirmed on Thursday that technical discussions had begun ahead of another meeting of eurozone finance ministers on Monday after talks broke down between them on Wednesday.

Hope that a deal can be reached to support Greek economic recovery and avoid the possibility of a default and exit from the single currency helped support Greek stocks on Thursday following days of volatility.

News of German support for compromise extended the rally on Friday, with some banks enjoying gains of more than 17%.

Tsipras expressed his hope that a "mutually acceptable" debt deal could be secured as early as next week.

He said: "The Greek delegation will take part in these meetings with crystal clear proposals and we will try and convince, not blackmail, our partners about our proposals.

"Our program will respect European rules .... we will keep balanced budget, respect the fiscal rules of the EU.

"We don't want to go back to era of deficits."

Tsipras said his government will propose a set of reforms particularly dealing with the "shortcomings of the Greek state" such as corruption and tax evasion.

The Greek government sees compromise as the way forward but it has ruled out extending the current bailout programme and its associated austerity.

It wants to negotiate a so-called bridge to tide Greece over for the summer until such time as a more permanent deal can be arranged.

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