Eurozone

German Chancellor Angela Merkel said on a visit to Japan on Monday that Europe faced a formidable challenge in reaching a financial aid agreement with Greece that would keep it in the euro zone.

Nikos Chrysoloras & Eleni Chrepa

Greece?s provisional agreement with creditors to avert a default started to crack as European officials said the country?s latest proposals fell far short of what was put forward two weeks ago and Greek ministers floated the prospect of a referendum if their reforms are rejected.

By Emma O?Brien and Nick Gentle

European bonds rose as the region?s central bank began buying sovereign debt. Greece led declines in stocks while shares in emerging markets fell to a three-week low.

A large majority of Greeks want Athens to reach a compromise deal with international lenders to avoid having to leave the euro zone, according to a survey published on Monday.

A list of reforms proposed by Greece last week to help it win creditor support is "far from complete," the head of the Eurogroup said.

Speaking at an event in Amsterdam on Sunday, Jeroen Dijsselbloem, who is also Dutch finance minister, said the Greek proposal was "serious" but not enough.

Greek Finance Minister Yanis Varoufakis hinted at the possible holding of referendum or early election in case the Eurozone rejects the country's debt renegotiation plans.

Varoufakis said this in an interview for Italian daily Corriere della Sera on Sunday, daily Kathimerini reports.

 Desperate for cash, the government is asking state companies for loans, offering them a higher interest rate

By Dimitris Kontogiannis

By John Geddie

Most euro zone government bond yields fell on the first day of the European Central Bank's sovereign debt purchase programme, with only fears about Greece's funding spoiling Monday's launch party.

Economy Minister George Stathakis expressed positive expectations for Monday's Eurogroup meeting.

"I believe that today's Eurogroup will take a further step in the right direction," he said while on a visit to Chania, Crete. "The proposals of the government lay the groundwork that helps to conclude the review process of the government's proposal by the end of April."

Germany's deputy finance minister said on Monday that he did not expect concrete dedcisions on Greece to be taken at a meeting of euro zone finance ministers later in the day because they are still waiting for more financial details on Greek reform plans.