BRUSSELS, Belgium -- Greek stocks led a European market rally on Friday amid hopes that the new government is inching its way to a debt compromise deal with its creditors in the 19-country eurozone.
The main stock index in Athens was up almost 5 per cent in midday trading, with bank shares leading the charge, as investors grew optimistic that a deal is possible on Greece's demand to lighten the load of its bailout after European leaders took conciliatory steps at a summit.
The brighter mood buoyed European markets across the board, with Germany's index at a record high.
At the summit in Brussels, Greece and its creditors sought to bridge their differences, though much work remains if a deal is to be clinched on Monday, when eurozone finance ministers meet to discuss the issue.
Following weeks of haggling, the two sides agreed to start on Friday technical discussions on Greece's request to ease the burden of its bailout program. The results will inform Monday's meeting.
Greek Prime Minister Alexis Tsipras and his Syriza party won elections last month on a promise to scrap the country's current bailout program and get a new one with easier repayment terms and fewer budget austerity measures.
The new program, which Athens calls a "bridge program," would help the country emerge from years of financial dependence on creditors while also guaranteeing it remains solvent and does not fall out of the euro.
Many eurozone creditor nations, particularly Germany, have been publicly reluctant to concede the possibility of agreeing on an entirely new deal.
At the summit, however, the leaders softened their tones.
Tsipras expressed hope that a "mutually acceptable" debt deal can be secured next week.
"The Greek delegation will take part in these meetings with crystal clear proposals and we will try and convince, not blackmail, our partners," he said at the summit's conclusion. He promised to respect European rules on budget deficits and to not let Greece slide back into profligacy.
Tsipras also said his government will propose a set of reforms dealing particularly with corruption and tax evasion. "The spirit that prevails in the European Union is a spirit of compromise to the benefit of all the parties," he said.
German Chancellor Angela Merkel likewise sounded more open to reaching a deal.
"Europe always has been geared towards finding compromises," said German Chancellor Angela Merkel. "Compromises are agreed when the advantages outweigh the disadvantages. Germany is ready for this."
Despite a recent modest return to growth, the Greek economy is around 25 per cent smaller than it was before the crisis and poverty and unemployment have swelled. Greece is lumbered by huge debts, which stand at around 175 per cent of GDP, and it has repayments this year that it will have trouble meeting without outside help.
Greece's current bailout program ends after Feb. 28, and without a new one, Greece faces bankruptcy -- and a possible exit from the eurozone, a development that would devastate Greece's economy, at least in the short-term, and throw global financial markets into turmoil.
Jeroen Dijsselbloem, the head of the eurogroup of finance ministers, said he hoped the technical discussions taking place in Brussels will illustrate the issues, the extent of the differences between the two sides and "whether we could adjust the current program, put in the new ambitions and ideas of the Greek government, and still have a viable program to work on over the next months."
However, he sought to downplay expectations that a deal on Monday would be ready to be signed.
"Let me seriously douse your expectations on that point," he said. "It really will be difficult. We are politically far apart."
It seems that Europe's leaders are open to tweaking the policy requirements of the bailout to deal with the new Greek government's priorities. However, they will want to see offsetting measures to increases in the minimum wage, say.
Many of Greece's European creditors, particularly Germany, are hesitant to give in to Greece too easily for fear of setting a precedent for countries that run up excessive debts. The 240 billion euros (currently $272 billion) in rescue loans Greece is getting come from taxpayers in other countries.
