Greece has bristled at an ultimatum to request a bailout extension by the end of the week, and on Tuesday the office of Prime Minister Alexis Tsipras issued a sharp rebuke to its international paymasters.

"The Greek government will not accept ultimatums," the official line went. "It is determined to honor its public mandate and the history of democracy in Europe."

The statement added another level to the brinkmanship that is dragging Athens and the eurozone closer to a possible Greek exit from the euro.

The talks have pitted two contrasting finance ministers head-to-head

Debt-laden Greece is in an acrimonious tug-of-war with its international creditors over their insistence that the country continue unpopular economic reforms - opposition to which catapulted the leftist Syriza party into power in the first place.

Markets stable despite doubts

Tsipras' steadfast resistance to its creditors' demands, recently echoed in an op-ed by his plucky finance minister, Yanis Varoufakis, has led some analysts to question whether saving face politically has become more important for the Syriza leaders than actually keeping Greece in the euro.

"The [Greek] finance minister and the prime minister are either very inexperienced and bad in negotiating or they're incredibly clever," Marcel Fratzscher, the president of the German Institute for Economic Research, said in an interview with DW.

Both sides have been careful to weigh their words since the Greek election last month lest they upset markets, reiterating at every turn their willingness to find common ground.

Markets regained losses made in early trading on Tuesday as investor sentiment recovered from the initial shock of an earlier-than-expected collapse in the debt talks. Later in the day, traders seemed to prefer to be optimistic over the prospects of the two sides reaching a deal.

But while assurances have placated investors, they haven't completely drowned out the occasional veiled criticism.

Schäuble, Tsipras trade barbs

On Monday, German Finance Minister Wolfgang Schäuble gave a radio interview in which he said he felt sorry for the Greeks, for they had elected a government that was acting "irresponsibly."

On Tuesday, Tsipras shot back.

"It would be better if [Schäuble] would feel sorry for people walking around with their heads hung low," Tsipras said.

Greece has dismissed a proposal for a six-month extension to its current bailout program as "unacceptable," irking its international creditors, particularly Germany, which has ponied up more than any other European country to help keep Greece solvent.

Germany's exposure to Greece has put Europe's largest economy in a precarious situation - at least politically.

It is an unsavory prospect for many German politicians to admit they were wrong after advocating a Greek bailout.

"It would not be very easy for the German government to explain to the German electorate, 'Look, we promised there wouldn't be a haircut and we wouldn't lose any money on giving loans to Greece. Sorry, we were wrong,'" Fratzscher said.

On Tuesday, investor sentiment in Germany soared to its highest level in 12 months, but analysts cautioned that it could sink again very quickly over fears a Greek exit from the euro could depress German investment and consumption.