Greece and Europe raced to scrape together a last minute debt deal for Athens on Tuesday and avoid a catastrophic Greek exit from the eurozone a day after talks ended bitterly.
Greek borrowing prices soared and the euro sank against the dollar hours after the radical leftist government in Athens refused a demand by eurozone partners that it apply for an extension to its EU bailout.
Eurogroup head Jeroen Dijsselbloem, who is also Dutch finance minister, on Monday gave an isolated Greece 48 hours to request the extension to the bailout programme that expires at the end of the month, a demand that Athens bitterly refuses.
"The 18 ministers were absolutely agreed on the matter, it's the most reasonable way, the first signal must come from the Greeks," said Dijsselbloem, the morning after the talks broke up after only two hours.
Monday's meeting was the second time in a week that talks among eurozone ministers ended in acrimony amid accusations by Greece that Dijsselbloem, backed by Germany, had torpedoed deliberations with "absurd" demands.
"There was a compromise deal... but it was sunk by Dijsselbloem, presumably on German pressure," deputy foreign minister Euclidis Tsakalotos said in a tweet.
A government source added: Greece "will not accept ultimatums."
Despite the bitterness, Greek Finance Minister Yanis Varoufakis said the different sides would find agreement in time to set up a next meeting for Friday.
"We know in Europe how to deliberate in such a way to create a very good solution, an honourable solution out of initial disagreements," Varoufakis said arriving for EU-wide talks on Tuesday.
Negotiations would "achieve a very good outcome for the average European, not (just) the average Greek, not for the average Dutch person, or the average German," he added.
The chaos surrounding the debt talks alarmed analysts, with economists at Commerzbank now predicting that a Greek exit from the euro was 50 percent likely, up from 25 percent.
"After the euro-zone finance ministers again failed to find an agreement with Greece today, the euro membership of the country hangs in the balance," it said in a note, cited by Bloomberg.
Greek Prime Minister Alexis Tsipras swept into power last month on a promise to tear up the bailout agreement, all the while keeping the country in the 19-member eurozone.
But with the European portion of the 240-billion-euro ($270-billion) bailout expiring at the end of February, the exit from the euro remains a serious risk if no other financing is secured.
"We're reaching crunch time for Greece and the eurozone and I'm here to urge all sides to reach an agreement," said George Osborne, finance minister for non-euro Britain.
"Not having an agreement would be very severe for economic and financial stability," he said.
Without the bailout or a new EU deal, Greek banks will lose crucial access to funding from the European Central Bank, making a messy exit from the single currency dangerously likely.
In theory, the two sides are not that far apart.
Tsipras is demanding that the eurozone agree to short-term funding to buy the time needed to hammer out a new agreement, with lighter austerity conditions attached.
Greece has proposed to stick to 70 percent of the existing bailout programme but it would overhaul the remaining 30 percent which it sees as damaging to growth and toxic for ordinary Greeks.
Varoufakis told reporters Monday that the European Commission had made a proposal along this line but instead Dijsselbloem offered a different draft statement tying Greece to its current agreement.
This demand is key to Greece's 18 eurozone partners, especially the influential German Finance Minister Wolfgang Schaeuble, who insists that any change to austerity terms must pass within the current programme.
Greek stocks had initially plunged by more than four percent after the talks collapsed but later Tuesday entered positive territory.
Christophe Dembik, economist at Saxo Bank in Paris, said it was understandable that the extremely popular Greek government was sticking to its guns.
"Reneging on electoral promises by the Greek government risks provoking a social revolt and widening the electoral base for the (neo-nazi) Golden Dawn party," Dembik said.
"In the short or medium term, a Grexit seems unlikely, but in the long term, it may be inevitable. A new eurozone is emerging," he added.