(Recasts with ECB teleconference, adds FRANKFURT dateline)
* ECB holds teleconference on Greek bank funding
* Tsipras in Brussels for EU summit after debt talks stall
* Euro zone finance ministers unable to agree common position
* Next talks on Monday, less than two weeks before bailout expires
By Renee Maltezou and John O‘Donnell
BRUSSELS/FRANKFURT, Feb 12 (Reuters) - The European Central Bank raised pressure on Greece on Thursday to extend a bailout deal with its international creditors as new leftist prime minister Alexis Tsipras told EU leaders austerity is killing his economy and they must find an alternative.
After euro zone finance ministers failed to agree on a joint statement on the way forward on Greece’s debt crisis, the ECB’s Governing Council held a short-notice teleconference to discuss how long it could continue to keep Greek banks afloat.
The ECB declined comment, but two sources familiar with the matter said it concerned the provision of Emergency Liquidity Assistance (ELA) by the Greek central bank, which the ECB authorised as a temporary expedient when it stopped accepting Greek government bonds in return for funding last week.
Arriving for his first European Union summit, Tsipras told reporters: “I‘m very confident that together we can find a mutually viable solution in order to heal the wounds of austerity, to tackle the humanitarian crisis across the EU and bring Europe back to the road of growth and social cohesion.”
Other leaders said it was up to Greece to respect budget discipline and economic reform commitments made by previous governments if it wanted continued aid.
ECB executive board member Peter Praet said the ECB would apply its existing ELA rules to Greece. “It is key that the banks benefiting from emergency liquidity assistance remain solvent,” he told the Financial Times.
His comments appeared to signal that the central bank could cut the cash lifeline if Greece failed to reach a deal with its creditors before the 240 billion euro bailout expires at the end of this month, exposing Greek banks to a risk of capital flight and collapse.
Analysts say that could trigger a Greek exit from the euro zone, potentially causing wider financial turmoil.
Euro zone finance ministers in the Eurogroup will try again on Monday to bridge their differences, but at Greek insistence, there will be no preparatory talks between officials from Athens and the European Commission, the IMF and the ECB. Tsipras has vowed no longer to cooperate with the “troika” of lenders.
A Greek official said the hard left Syriza party leader, elected on a tide of public anger against austerity last month, was determined to put the Greek crisis at the centre of an informal EU summit in Brussels, which was to be mainly devoted to the conflict between Ukraine and Russia.
Tsipras may get short shrift from German Chancellor Angela Merkel and French President Francois Hollande, who flew in from Minsk after brokering an uncertain ceasefire in Ukraine in overnight talks with Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko.
Greek Finance Minister Yanis Varoufakis refused to sign up to a joint statement at Wednesday’s Eurogroup meeting because it referred to the bailout and its continuation, he said.
EU diplomats said attempts to bridge the gap had foundered over the words “extended” and “amended” - the Greeks refused the former and euro zone paymaster Germany rejected the latter.
“HUNG UP ON WORDING”
The Greek official accompanying Tsipras sought to depict the difference as largely semantic, saying: “We will try to reach an agreement and explain that we shouldn’t get hung up on wording.”
Playing down the threat to the banking system if creditors cut off funding after Feb. 28, the official said: “If we have a conclusion that says there is a programme in place, or if we are close to an agreement, no liquidity problems will exist.”
Greek borrowing costs edged up early on Thursday. Three-year yields were 51 basis points higher at 21.57 percent although 10-year yields were little changed at 10.92 percent. The benchmark ATG equity index rose 3.8 percent, steadying after a 4 percent fall on Wednesday.
The euro zone, led by Germany, but also the ECB and IMF, are insisting on firm conditions for any “bridge” financing. Other governments, including Ireland, Portugal and Spain, which have had to seek help under tough conditions, are also keen their own voters do not see Tsipras winning a better deal than they did.
EU officials play down the risk of Greece being forced out of the euro zone, something Tsipras and most Greeks do not want and which could send destabilising ripples across the bloc as it faces a confrontation with Russia over Ukraine.
However, the politics of the Greek debate are difficult.
“The real risk in Athens seems to be that Tsipras has raised expectations to such an extent that he could find it extremely difficult to back down from his rhetoric and strike a deal which the rest of the Eurozone could accept,” Berenberg Bank economists wrote in a note on Thursday.
Several officials said there was a gulf between the broad, imprecise demands of the Greek government and the Eurogroup’s call for firm, technical proposals.
Eurogroup chairman Jeroen Dijsselbloem told a midnight news conference: “We didn’t actually go into detailed proposals, we didn’t enter into negotiations on content of the programme or a programme, we simply tried to work next steps over the next couple days. We were unable to do that.” (Additional reporting by Jan Strupczewski, Alastair Macdonald, Foo Yun Chee, Robin Emmott, Tom Koerkemeier, Ingrid Melander, Barbara Lewis, Adrian Croft, Philip Blenkinsop and Julien Ponthus Writing by Alastair Macdonald and Paul Taylor; editing by David Stamp)