Greece seeks last-minute debt deal as default nears

Brussels (AFP) - Greece asked for a fresh two-year rescue deal with the European Union on Tuesday in a final roll of the dice just hours before its current bailout expires and it misses a critical IMF payment.

The eleventh-hour appeal came as 20,000 pro-bailout supporters took to the streets of Athens, where banks have been shut by the spiralling debt crisis and people are queueing for cash.

Athens is about to enter uncharted waters without international aid for the first time in five years, sparking fears of a chaotic eurozone exit which could have untold repercussions for global markets and the EU.

The Greek government asked the International Monetary Fund to extend its payment deadline on a payment of about 1.5 billion euros ($1.7 billion) beyond 2200 GMT after eurozone finance ministers on Tuesday rejected an extension to the current aid programme.

The ministers will hold further talks Wednesday morning on a request for a new bailout.

Prime Minister Alexis Tsipras plunged talks with creditors into chaos when he announced a referendum for Sunday on whether to accept bailout reform plans that he said would humiliate the country.

"The practical circumstances is that the old programme expires tonight at 12 and practically and legally there's little we can do. Unfortunately the old programme will expire tonight," Eurogroup chief Jeroen Dijsselbloem told CNN.

Greece now looks poised to become the first country to default on the IMF since Zimbabwe in 2001, and the wealthiest, in terms of standards of living.

- Germany says no talks before referendum -

Greece's creditors want leftist Tsipras to ditch Sunday's referendum and there were signs of movement from Athens, with Malta's Prime Minister Joseph Muscat saying Greece had offered to suspend the vote if negotiations with the EU are reopened.

There was no immediate confirmation from Athens, where the Greek premier's office said only that Athens had requested an 29.1 billion euro agreement with the European Stability Mechanism "to fully cover its financing needs and the simultaneous restructuring of debt".

The ESM, created in 2012, is designed as a means to handle financial crises in the eurozone and keep the single currency region stable.

The proposal by Athens followed European Commission chief Jean-Claude Juncker's attempt to clinch a "last-minute" solution before the referendum which would involve accepting the EU-IMF reform proposals.

Chancellor Angela Merkel of Germany stuck to Berlin's hard line when she said she would not discuss any new Greek request until after Sunday's referendum.

"Before the referendum Germany can't negotiate a new request" for assistance, Merkel was quoted as saying by a lawmaker of her conservative Christian Democrats.

Europe's main stock markets ended the day firmly lower Tuesday with London's FTSE 100 index falling 1.50 percent, the DAX 30 in Frankfurt down 1.25 percent and the CAC 40 in Paris losing 1.63 percent.

The Athens market, like the country's banks, is closed this week.

On Wednesday, the European Central Bank's governing council will meet to discuss the crisis in Greece.

It was the ECB's decision on Sunday to not increase emergency funding for Greek banks that pushed Athens to close lenders and impose capital controls.

The ECB will probably stick with its current stance on Greek banks but could take measures to prevent contagion in other eurozone markets.

- Govt 'lacks organisation' -

In Greece, many people have been caught up in lengthy queues at ATMs after banks were shut down for one week, to withdraw the maximum daily allowance of 60 euros ($66). Tourists are however allowed unlimited withdrawals.

Police said 20,000 people rallied in historic Syntagma square to call for a "Yes" vote in the bailout referendum, a day after a large rally backing Tsipras's "No" stance on Monday.

Protestors carried banners featuring slogans such as "Greece is Europe" while the cry "resign" went up from the crowd repeatedly.

Lawyer Vassiliki Salaka said those in charge of Greece now were "incompetent, they lack organisation, they don't know what they want".

But many other Greeks also back the government's defiant stance against the country's creditors since it was elected in January, blaming creditors for forcing Greece into years of painful recession by demanding tough austerity cuts.

Pro-Greece demos were set to take place this week in Berlin, Paris, Brussels, Rome and Amsterdam.

As the tussle over Greece's future intensified, sympathetic people have donated over 200,000 euros so far to an online crowdfunding project set up by a British shoe-shop employee to help meet the IMF repayment.

Greece has debt worth nearly 180 percent of its GDP after receiving two bailouts worth 240 billion euros since 2010. Unemployment has more than doubled since 2009 to 25.6 percent and pensions and benefits roughly halved between 2010 and 2014.