French President Francois Hollande has urged Greece to prove it can pass reforms demanded by international creditors, after talks with PM Antonis Samaras.
Greek PM Antonis Samaras has been appealing for more time to introduce the reforms.
But Francois Hollande said no further decision could be taken until European ministers consider a major report on Greece’s finances, due in September.
Donors including the EU insist Greece has to make major spending cuts.
These are needed if Greece is to secure the next tranche of its bailout.
French President Francois Hollande has urged Greece to prove it can pass reforms demanded by international creditors, after talks with PM Antonis Samaras
The Greek government is under pressure to win concessions from Europe to placate the tired nation and lessen the likelihood of a destabilizing period of social unrest.
Antonis Samaras is seeking an extension of up to two years for the necessary reforms, in order to provide Greece with the growth needed to improve its public finances.
In talks with German Chancellor Angela Merkel earlier this week, he was told that the decision would depend on a report from the so-called troika – the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission.
Francois Hollande also said Europe needed to consider the report before it could make any further decisions on Greece.
He said decisions on whether to grant Greece more time should be taken when European finance ministers meet in early October.
“We’ve been facing this question for two and a half years, there’s no time to lose, there are commitments to reaffirm on both sides, decisions to take, and the sooner the better,” he said.
Greece’s continued access to the bailout packages depends on a favorable report from the troika.
Athens is trying to finalize a package of 11.5 billion euros ($14.4 billion) of spending cuts over the next two years.
It is also being asked to put in place economic and structural reforms, including changes to the labor market and a renewed privatization drive.
The measures are needed to qualify for the next 33.5 billion-euro installment of its second 130bn-euro bailout.
Greece needs the funds to make repayments on its debt burden. A default could result in the country leaving the euro.
European Council President Herman Van Rompuy has announced that EU leaders want Greece to remain in the eurozone but to “respect its commitments”.
Herman Van Rompuy, speaking at an informal EU summit, said continuing “vital reforms” were essential for Greece to overcome its economic problems.
The eurozone crisis has overshadowed the talks, amid fears that Greece may have to exit the single currency.
The eurozone is said to be preparing for such a scenario.
“We want Greece to remain in the euro area while respecting its commitments,” Herman Van Rompuy told a news conference in Brussels.
“We are fully aware of the significant efforts already made by the Greek citizens.
“The eurozone has shown considerable solidarity having already disbursed, together with the IMF (International Monetary Fund) nearly 150 billion Euros in support of Greece since 2010.”
European Council President Herman Van Rompuy has announced that EU leaders want Greece to remain in the eurozone but to "respect its commitments"
He said the EU would take action to return Greece to economic growth and job creation.
But Herman Van Rompuy said “continuing vital reforms” were “the best guarantee for a more prosperous future in the euro area”.
Referring to Greece’s forthcoming elections in June he said: “We expect that after the elections the new Greek government will make that choice.”
On Wednesday, European stock markets fell about 2% amid anxiety that Greece might have to exit the euro.
herman Van Rompuy said talks had been “focused and frank”.
He said there was agreement on the need for economic growth as well as measures to restore financial stability, which he described as “two sides of the same coin”.
UK Prime Minister David Cameron emphasized the agreements that EU leaders had reached on Wednesday.
“It was a good meeting in that there was complete agreement that dealing with deficits and getting growth are not alternatives, they go together. You need to do one in order to get the other,” David Cameron said.
Greece’s caretaker Prime Minister Panagiotis Pikrammenos said he had “had the support from almost every country member”.
EU leaders began the summit with Germany resisting pressure to launch eurobonds as a way to ease the eurozone crisis.
German Chancellor Angela Merkel said the bonds, pooling eurozone debt, would violate EU treaties and would “not contribute to kick-starting growth”.
France’s President Francois Hollande said that he wanted discussion of eurobonds and Irish PM Enda Kenny said the idea would be on the table.
Earlier, Angela Merkel said talks would not result in decisions but would influence formal summit talks in late June.
The leaders would look at ways to deepen the EU internal market, boost mobility in Europe’s labor market and better target European Investment Bank funding for projects. Such measures could help stimulate growth, she said.
The summit has been the first opportunity for President Francois Hollande to shift the emphasis from austerity to growth – a key message he gave to French voters, who elected him on 6 May.
The French Socialist leader’s victory is seen as a challenge to the prevailing austerity drive in the EU, which is favored by Germany.
World markets are down as Greece’s continuing political uncertainty undermines confidence.
Greece failed to form a coalition government through talks on Sunday and will continue discussions with political leaders on Monday evening.
Bank shares are worst hit, particularly in Spain and France, with Madrid’s IBEX index down 3% and the CAC down 2.7%.
The Dow Jones has opened 1% lower while London’s 100 share index is down 2%.
Germany’s DAX is down 2.5%.
The undermining factor is again the future of the eurozone.
Eurozone finance ministers are meeting in Brussels to discuss the situation in Greece and Spain.
World markets are down as Greece's continuing political uncertainty undermines confidence
Irish Finance Minister Michael Noonan expressed his support for Greece’s place within the eurozone: “We are not planning a Greek exit, that’s not our business.
“My view is that Greece should continue to stay in the euro, and any support I can give them at the meetings over the next two days to achieve that objective I will do so.”
But he warned that any new Greek government must stick to the austerity plan already agreed.
French banks were among the biggest fallers as investors worried about their exposure to other troubled eurozone countries.
Losses worsened throughout the session leaving BNP Paribas, Societe Generale and Credit Agricole down almost 5%.
Spain’s Banco Santander was also down almost 5% while part-nationalized Bankia lost more than 9%.
They said they would set aside an extra 2.7 billion Euros and 2.1 billion Euros respectively to meet new government requirements aimed at cleaning up the country’s ailing property market.
The price of oil also fell on fears about weakening economic activity.
Brent crude fell $1.69 to $110.57 a barrel. In March, it was $128 a barrel.
US crude fell $1.86 to $94.27.
Meanwhile, both Spain and Italy carried out successful bond auctions on Monday.
Appetite for Spanish and Italian debt was more than strong enough, but the return demanded by investors in Spain’s debt was higher than in previous auctions, reflecting a dip in confidence.
Spain sold 2.9 billion Euros in short-term debt, paying 2.985%, up from 2.623% last time.
The difference in the rate demanded by Spanish 10-year bond investors over the equivalent German bunds hit 4.83%, its highest level since the creation of the euro.
The yield, or interest rate, on Spain’s key 10-year bonds, which are traded on the market, jumped 23 basis points to a record high of 6.22%.
Italy raised 5.25 billion Euros, paying a yield of 3.91%, almost unchanged on the previous rate of 3.89%.
Greece’s lack of a government puts in doubt its ability to stick to austerity measures imposed as part of its financial bailout. Without holding to agreed cuts it will not get the rest of the support funds it needs to function.
Adding to the lack of clarity is the fact that anti-bailout parties did well in the elections.
Anti-austerity feeling may be growing in Germany too after Chancellor Angela Merkel’s party suffered a defeat on Sunday in an election in North Rhine-Westphalia, the country’s most populous state.
On top of that, new French President Francois Hollande won his place after promising to focus more on growth rather than austerity, raising concerns as to whether he will be able to work as closely with Angela Merkel as his predecessor Nicolas Sarkozy did.
The two were the driving force behind the eurozone’s fiscal compact.