As Greek Prime Minister Alexis Tsipras and European Commission chief Jean-Claude Junker prepare for last-minute crisis talks, European leaders have finally caved on one of the most crucial sticking points in crisis talks, after it was reported Tsipras, Angela Merkel and Francois Hollande had reached an agreement on cutting targets for Greece's primary budget surplus in the latest draft of a deal.
Reuters reported today that in a telephone conversation ahead of Tsipras' meeting with Juncker, the three had agreed on the need for "low primary budget surpluses".
Eurogroup president Jeroen Dijsselbloem is acting as a "notary" between the two leaders in their meeting to reach a decision. The three had dinner after a meeting that lasted over 90 minutes.
Earlier, the FT had reported that sources drafting the text said expectations for this year's primary budget surplus had been cut to one per cent from three per cent, rising to two per cent next year, three per cent in 2017 and 3.5 per cent in 2018.
Greece desperately needs to agree austerity measures with its lenders to unlock a €7.2bn tranche of bailout money.
Despite Tsipras meeting Juncker, there were still jitters over whether a deal can be reached. Nikos Filis, a spokesman, said the country would delay the payment of €300m (£218m) to the International Monetary Fund (IMF) if a deal still looked a long way off by the time it becomes due on Friday.
Meanwhile, one of the European Commission's top spokesmen has poured cold water on any signs of optimism. Margaritis Schinas said a deal is "unlikely" today, and as talks lasted for several hours, his prediction looked correct.
The euro fell on the news trading 0.29 per cent lower against the dollar at $1.1119 at lunchtime. However, it later bounced in response to comments from European Central Bank chief Mario Draghi, rising to $1.1270 in the late afternoon.
Earlier, Tsipras had appeared on Greek television to urge creditors to be "realistic". He said:
I will explain to Juncker that today, more than ever, it's necessary that the institutions and the political leadership of Europe move forward to realism.
Although markets are desperate for any good news from Greece, analysts have urged caution. Even if it does unlock the bailout money, "another bailout will likely just push the trickier and more unpleasant Greek issues down the road," warned Connor Campbell, a financial analyst at Spreadex.