Greece fails to make IMF payment; Merkel says nothing to talk about before Sunday referendum; Stocks higher

Euro area finance ministers decided to take up Greece’s new aid bid for the second time at 15:30 p.m. Brussels time Wednesday after Greece's request for a second bailout was dismissed by German Chancellor Angela Merkel.

European leaders are awaiting signs that Greek Prime Minister Alexis Tsipras is ready to compromise as his country buckles under capital controls and fails to make its International Monetary Fund payment.

Merkel dismissed Greece's request for a new two-year bailout program to tide over a cash-strapped economy.

With Greece’s stay in the euro club at stake, finance ministers in the 19-nation bloc are scrambling for a solution to pull Greece away from the precipice after more than five years of crisis fighting and two bailouts.

Tsipras announced the July 5 referendum on budget cuts to be a vote against austerity, but analysts mostly view it as an attempt to remain in the euro. The outcome could determine whether the European Central Bank pulls a financial lifeline keeping the economy on life support.

Merkel said there was “absolutely nothing” to talk about before Sunday, Bloomberg reports.

There are signs that the gap is narrowing.

Eurozone finance ministers will hold a Eurogroup conference call on Greece at 1530 GMT on Wednesday, pushing it back by six hours at the request of several ministers, the group’s spokesman said.

As three officials with knowledge of the matter said to Bloomberg, at first glance, a plan devoid of any economic-reform measures appeared to be a non-starter.

“The request from Greece appears designed to keep the region somewhat off-balance, and to create the impression that Tsipras is searching for an imaginative solution,” said Malcolm Barr, an economist at JPMorgan Chase Bank in London.

“Any deal struck at this stage is going to be on the Eurogroup’s terms.”

According to an official speaking on condition of anonymity, Greece has agreed to provide more information and said it might change its referendum terms and recommendation.

Barclays wrote in a note:

“With no fundamental change in the institutions’ offer, Tsipras will have little choice than to maintain his support for a ‘No’ vote, as he announced last Friday.”

“This has become even more important, since he publicly declared that he would resign in case of a ‘Yes’ vote. The referendum is thus now about euro membership and Tsipras’s future.”

In Washington, the IMF is thinking on its next move after the first missed payment since the institution was created during World War II.

Its board will probably grant a Greek request for an extension.

Meanwhile, European markets opened higher:

the EURO STOXX 50 jumped 1.06%, France’s CAC 40 advanced 1.06%, while Germany’s DAX 30 jumped 1.08%.

London's FTSE 100 climbed 0.88%, as U.K. lenders tracked their European peers higher.

Financial stocks surged, as French lenders BNP Paribas and Societe Generale gained 0.78% and 1.34%, while Germany's Commerzbank and Deutsche Bank rose 0.17% and 0.26%.

In the U.S., equity markets are expected to open higher.

The Dow Jones Industrial Average futures pointed to a 0.57% gain, S&P 500 futures showed a 0.58% increase, while the Nasdaq 100 futures indicated a 0.57% rise.