ATHENS/KRUEN, Germany (Reuters) - Greece proclaimed a new willingness to compromise with its international creditors on Monday, as German Chancellor Angela Merkel warned that time was running out for a reform-for-aid deal to keep the country in the euro.
Three days after Prime Minister Alexis Tsipras told his parliament the latest proposal from the EU and IMF was "absurd", the Greek government said it was ready to negotiate a settlement acceptable to both sides by the end of this month - when Greece's bailout programme expires and it faces the prospect of default on its debts.
For all the more positive mood music, a European Union official reported "no new developments" in the hunt for a deal under which the creditors would resume aid in return for promises of more austerity.
Athens and Brussels exchanged proposals last week in the hope of breaking an impasse that, if unresolved, could force Greece out of the euro zone, an event that could shake financial markets and even the global economy.
Merkel, who is due to meet Tsipras along with French President Francois Hollande on Wednesday, stressed she wanted Greece to remain part of the currency bloc.
But, speaking after a summit of the Group of Seven industrialised nations in Germany, she said there was "not much time left".
U.S. President Barack Obama said after the meeting in the Bavarian Alps that the Greeks need to make "some tough political choices" and both sides must show flexibility.
Hollande underlined that to reach the end of June deadline, a deal had to be nailed down soon. Tsipras has called for broad political negotiations, but Hollande made clear the EU was more interested in the details of what he will promise.
"We must quickly have, in the coming hours or days, technical talks to narrow positions and to replace the proposals Greece cannot accept with alternative measures," he said after the G7 meeting.
As he spoke, European Economics Commissioner Pierre Moscovici held talks in Brussels with Greece's chief negotiator Euclid Tsakalotos and minister of state Nikos Pappas.
The Wall Street Journal cited unnamed sources as saying the creditors last week proposed extending the bailout programme until March 2016 in return for steps including pension cuts and tax increases.
One senior euro zone official said he was unaware of any such proposal. Greek officials were unavailable for comment on the report.
Tsipras's uncompromising remarks on Friday risk costing him what friends he had left in Brussels.
With European Commission President Jean-Claude Juncker expressing open exasperation, Greek government spokesman Gabriel Sakellaridis signalled a flexibility that was absent from Tsipras's speech.
"Definitely our proposal is the starting point," Sakellaridis told a news conference. "The target of the Greek delegation is to explore the possibility of an agreement that will satisfy both sides." He left open the possibility of another extension to the programme.
Even Finance Minister Yanis Varoufakis, who fell out badly with his German counterpart Wolfgang Schaeuble earlier in the negotiations, joined in the spirit. He described talks with Schaeuble in Berlin on Monday as "very helpful" and "extremely friendly".
Opinion polls suggest the Greek public are willing to accept some compromises in a deal with the creditors to resume the funding that has kept their country afloat since it almost went bankrupt in 2010. A poll by the University of Macedonia for Skai TV released on Monday indicated that just 16 percent wanted to leave the euro, while 51.5 percent feared it could happen.
However, the EU and IMF are insisting that yet more reform and austerity be imposed on a population that has already suffered a plunge in living standards and soaring unemployment.
An EU official travelling with Juncker at the G7 summit said he had still not received Greek counter-proposals that Tsipras promised last Wednesday.
"There are absolutely no new developments," the official said. Juncker accused Tsipras on Sunday of failing to keep his word, misrepresenting the creditors' offer and misleading his parliament.
One official from Germany, where public opinion is deeply hostile to Greek demands for aid, gave a blunter assessment: “Juncker was really enthusiastic about Tsipras, and now he’s depressed. We were never enthusiastic about him, and so we’re not depressed now.”
Athens badly needs the creditors to release remaining funds from the bailout programme to meet debt repayments by the end of June but Tsipras told parliament he would not accept an agreement that did not include the promise of debt relief.
The European Central Bank, which is authorising emergency funding for Greek banks to offset huge deposit withdrawals by anxious savers, said any departure from the euro would not cause the kind of international havoc that threatened the bloc after Athens first ran into trouble.
Speaking in Canada, ECB Governing Council member Christian Noyer also said Athens had only "a matter of days" as any agreement would need to be approved by various European legislatures before the end of June.
"Frankly speaking, we have not seen a convincing bunch of proposals that ... would be able to convincingly restart the economy," said Noyer, who is the French central bank chief.
Syriza won power this year on promises to win a reduction in Greece's debt mountain and to walk away from the 240 billion euro bailout programme.
Additional reporting by Paul Taylor, Jan Strupczewski, George Georgiopoulos, Karolina Tagaris, Ingrid Melander, Randall Palmer and Allison Lampert; writing by Deepa Babington and David Stamp; editing by Philippa Fletcher and Kevin Liffey