Greece debt crisis: EU summit cancelled as talks continue Published duration 12 July 2015 Related Topics Greece debt crisis

media caption Finnish minister Alexander Stubb: "The conditionality presented by the Greeks is simply not enough"

A summit of all European Union members planned for Sunday has been cancelled as "very difficult" talks over a third bailout deal for Greece continue.

Eurozone finance ministers resumed talks that began on Saturday afternoon.

Leaders of the Eurogroup countries are now gathering in Brussels. European Council president Donald Tusk said the meeting would "last until we conclude talks on Greece".

Without a deal, it is feared Greece could crash out of the euro.

Arriving for the meeting, Greece's PM Alexis Tsipras said he was looking for an "honest compromise".

"We can reach an agreement tonight if all parties want it."

Eurogroup leader Jeroen Dijsselbloem has described the negotiations as "very difficult".

"We have had an in-depth discussion of the Greek proposals, the issue of credibility and trust was discussed and also of course financial issues involved," Mr Dijsselbloem told reporters after Saturday's talks ended.

"It is still very difficult but work is in progress."

Analysis: Chris Morris, BBC News, Brussels

Frustrated and fatigued, finance ministers have gathered for a second day to try and resolve the clear divisions within the eurozone over Greece.

France and others are pushing for a deal with Greece, while a group of sceptical countries led by Germany harbour grave reservations.

But there are still influential players pushing for an announcement today that negotiations on a third bailout with Greece can begin.

That should be enough to allow the European Central Bank to intervene once again, and prevent Greek banks going out of business.

The fact that a meeting of all 28 EU leaders has been cancelled suggests that the focus is still on finding a deal within the eurozone, rather than looking at the consequences of a Greek exit.

The ministers have reportedly discussed in detail the option of easing Greece's debt burden as long as Athens enacts legislation immediately to reform taxation, pensions and administration. There will be no write-down of debt.

But the talks remain complex and European Commission Vice President Valdis Dombrovskis said it was "utterly unlikely" a mandate would be achieved in Sunday's meeting to start formal negotiations on the third bailout.

Slovakian Finance Minister Peter Kazimir was similarly downbeat, saying: "It's not possible to reach a deal today. We can agree on certain recommendations for the heads of state. That's all. The breach of trust... it's so big, it's not possible to achieve the deal."

And a draft statement from finance ministers, seen by Reuters, suggests a breakthrough on Sunday is unlikely.

The statement says Greece must pass laws to change its VAT and pension systems and take other measures before negotiations for a third bailout can begin.

The draft, which will be presented to the Eurogroup, says "there is not yet the basis to start the negotiations on a new programme," Reuters quotes it as saying.

media caption "Open expressions of distrust mean a deal is still a long way off" reports BBC correspondent Jonny Dymond

Reports on Saturday suggested that German ministers were drawing up a plan that would allow Greece to exit the eurozone temporarily if this weekend's talks fail - something Athens says it is not aware of.

Dimitrios Papadimoulis, vice-president of the European Parliament and a member of Greece's ruling Syriza party, reacted angrily to the eurozone's approach in the talks so far.

"What is at play here is an attempt to humiliate Greece and Greeks, or to overthrow the [Alexis] Tsipras government," he said.

The measures submitted in the latest Greek document include:

tax rise on shipping companies

unifying VAT rates at standard 23%, including restaurants and catering

phasing out solidarity grant for pensioners by 2019

€300m ($332m; £216m) defence spending cuts by 2016

privatisation of ports and sell-off of remaining shares in telecoms giant OTE

scrapping 30% tax break for wealthiest islands

Referendum

Greece is asking creditors for €53.5bn ($59.47bn; £38.4bn) to cover its debts until 2018.

However, the amount of the new bailout could reach €74bn as Greece seeks a restructuring of its massive debt, which it says is unsustainable.

Of the €74bn, €58bn could come from the EU's bailout fund, the European Stability Mechanism, with €16bn from the IMF, sources have said.

The Greek government this week set out a new list of austerity measures to try to secure the bailout - many of which had been rejected by the Greek people in a referendum last Sunday.

Greek Finance Minister Euclid Tsakalotos is attending the talks in Brussels, trying to convince his counterparts that his government can be trusted to push through its economic reform plan.

As the talks drag on, Greece's financial situation is close to collapse.

Greece fell into arrears on an International Monetary Fund repayment on 20 June and faces a €3bn payment to the European Central Bank on 20 July.

Banks have been closed for two weeks and a €60 daily limit on cash machine withdrawals, imposed on 28 June, remains in force for Greek citizens.

Economy Minister Giorgos Stathakis told the BBC that if there was a deal, banks could reopen within the week, but he admitted it could take a "few months" to remove capital controls.