Greek borrowing costs leapt and bank shares were hammered after the ECB pulled the plug on its funding for the country's financial sector. As David Pollard reports Athens called the move an act of coercion adding tension to an already high stakes meeting between Germany's and Greece's finance ministers in Berlin.
There's little open solidarity from Europe's leaders towards Greece's new finance minister. At least some was on show from anti-austerity protesters in Berlin. He may need it. Just hours after the ECB pulled the plug on its funding for Greek banks, Yanis Varoufakis was in what was billed as a showdown meeting. With his hardline German counterpart, Wolfgang Schaeuble - from whom, little sign of concession. (SOUNDBITE) (German) GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE, SAYING: ''It must be said that the origin of the difficult path that Greece is on, in many different ways, lies in Greece, and not in Europe and certainly not in Germany.'' What Greece asked for is time. (SOUNDBITE) (English) GREEK FINANCE MINISTER YANIS VAROUFAKIS, SAYING: ''Our proposal is that there should be a bridging programme between now and the end of May ... We would like to call this a new contract between Europe and Greece and the IMF and the ECB that will once and for all would settle this issue so that you don't have to fill your newspapers and your television bulletins with news about Greece.'' Time could be in even shorter supply. Greek bonds will no longer be accepted by the ECB in return for funding. That decision sent Greek shares down over 20 per cent in early trading. And pushed three-year government borrowing costs up nearly the same amount. Markets took it as a warning shot across Greek bows. Pressure to reach a debt deal, or if not, extend its bailout programme - it expires at the end of the month. NAB head of strategy, Nick Parsons. (SOUNDBITE) (English) NICK PARSONS. HEAD OF MARKETS STRATEGY, EUROPE, NAB, SAYING: ''If we think of the negotiations between Greece and the ECB as a game of chess, this just moves the pawn one square forwards ... It's just buying time, restating negotiating positions.'' It does put an unwelcome spotlight on Greek banks. Amid a recent exodus of funds, two of them - it's not been specified which - are already reported to have tapped emergency funding from the central bank. ETX Capital's David Papier. (SOUNDBITE) (English) DAVID PAPIER, MARKET COMMENTATOR, EXT CAPITAL, SAYING: ''They're still going to be able to access funding from the Greek central bank, but it's going to be at a much, much higher cost. Whether it's going to be good for Greece or not is another story because, let's face it, higher borrowing costs is going to plunge them into higher debt.'' Germany appears unwavering. A new document showing Berlin wants Athens to reverse promises to raise the minimum wage, halt privatisations and other moves by the new government to roll back austerity. The promises that got it elected.