Greece has reacted with fury to Dijsselbloem’s comments raising the prospect of a Cyprus style bail-in on Greek banks, reports our correspondent in Athens Helena Smith.

“It would be useful for all if Mr Dijsselbloem respects his institutional role in the euro zone. It is hard for us to comprehend the reasons that propel him to make statements that are not in accordance with the role that he has been given,” said the government spokesman Gavriel Sakellarides in a hard-hitting statement. The Eurogroup chief was peddling fantasy scenarios, he added.

“We consider it unnecessary to remind [everyone] that the Greek republic cannot be blackmailed.”

Greece is calling for fair treatment not special treatment from the rest of the eurozone.

An article in the FT by Greek deputy prime minister Yannis Dragasakis, co-authored by finance minister Yanis Varoufakis and minister for international economic affairs Euclid Tsakalotos says:

It is a common belief that the Greek government is seeking special treatment relative to other stressed eurozone members. We are not; we are seeking equal treatment.

Since the onset of the crisis, our economy has shrunk 26%; unemployment has risen from 8 to 26%; and wages have declined 33%. These outcomes are worse than those experienced by any country during the 1930s and far worse than those projected under the two Greek adjustment programmes. This is why the Greek government has criticised these programmes...

While the crisis has made matters worse for Greece and others, it has had unintended — but positive — consequences for “core” eurozone countries. Germany and others have benefited from exchange and interest rates that are lower than they would have faced had they still had their own currencies....

[Greece] is in a position like that of Sisyphus — a man condemned to roll a boulder to the top of a hill, only to see it roll down again. Greeks have implemented austerity and have suffered much more than expected. Many of the 60% of young people out of work will one day be reclassified as long-term unemployed. We risk condemning an entire generation to a future without hope. To avoid that, what we ask from our eurozone partners is to treat Greece as an equal and help us escape from this Sisyphean trap.

The full piece is here (£):

All we ask is that Europe give Greece a chance

The International Monetary Fund has cut its estimate for Portugal’s budget deficit this year to 3.2% of GDP from its 3.4% forecast in January.

But this is still higher than the 2.7% predicted by the country’s government, and the IMF said Portugal needs to press ahead with structural reforms:

Portugal’s economic recovery is expected to strengthen this year. Under the economic adjustment program, severe imbalances were corrected, growth was restored and unemployment began to decline. However, long-standing challenges will require sustained structural reforms. A confluence of positive external factors – a more favorable euro exchange rate, a highly supportive monetary policy environment, and low oil prices - provides an excellent window of opportunity to undertake these reforms.

The full statement from the IMF mission is here.

Eurogroup president Jeroen Dijsselbloem has apparently been upping the ante in the tortuous stand off between Greece and the eurozone:

And speaking of wartime reparations, here are the latest developments:

Several senior Social Democrats (SPD) and Greens in Germany have for the first time said their nation should consider paying reparations to Greece for Nazi crimes committed during the second world war, breaking ranks with Angela Merkel’s government.

Relations between Germany and Greece have deteriorated as Athens tries to renegotiate its bailout terms and Berlin fears it will ditch previously agreed financial promises.

The Greek prime minister, Alexis Tsipras, who is due to meet Merkel in Berlin on Monday, has accused Germany of using tricks to avoid paying reparations. One of his ministers raised the prospect of seizing German property to compensate victims of a Nazi massacre.

While Berlin says it has honoured its obligations, including a DM115m payment to Greece in 1960 (around £45m at the time), some mainstream German politicians have gone against government policy and said it was impossible to draw a line under the highly charged issue.

Full story here:

German politicians admit Greece has case for wartime reparations

Back with Greece, and I think this comes under the heading of “every little helps”:

Wall Street has opened sharply lower after Monday’s rally, ahead of the two day US Federal Reserve meeting which begins today.

The central bank’s statement about interest rates and its economic projections will be released on Wednesday.

Economists will be watching the wording of the statement carefully to try and gauge when the Fed will raise rates. It could all boil down to one word: if the central bank removes its pledge to be “patient” about lifting rates, this could start the clock ticking in earnest. Ranko Berich, head of market analysis at Monex Europe said:

It’s not often that a crucial monetary policy statement boils down to one word, but [Federal Reserve chair] Janet Yellen has created the perfect set of circumstances for markets to do just this with this week’s Federal Reserve Open Market Committee meeting.

In her recent testimony, Yellen said that rates could rise at any subsequent meeting, just as soon as the Fed removes the word ‘patient’ from its statement on tightening monetary policy. Market attention will therefore be firmly fixed on whether the Fed is confident enough in the recovery to remove this word.

We’ve seen some soft data from the US recently, for example Friday’s Producer Price Index which indicated potential weakness in consumer prices, and the Fed has grounds to continue being patient with rate hikes. However, with expectations so high for a hawkish FOMC statement any disappointment could lead to a large pullback in the dollar, which has been utterly rampant this month.

Ahead of the meeting the Dow Jones Industrial Average has opened lower and is now down almost 160 points or 0.89%, on the basis that a rate rise will strengthen the dollar further - despite the caveat from Berich above - which in turn would hurt stocks.

Heads-up. Euro-area finance ministry officials are expected to hold a conference call this afternoon to discuss Greece’s finances, from 3.30pm GMT (5.30pm local time).

That’s a Working Group meeting, points out Efi Efthimiou of financial website CapitalGR.

Bookmaker Paddy Power has hiked the odds on Greece leaving the eurozone this year from 5/1 to 10/1, concluding that Grexit looks less likely.

Here’s the latest odds:

• 6/4: Greece to adopt official currency other than the Euro by the end of 2018
  
• 3/1: Greece to hold another general election in 2015
  
• 7/1: European commission to confirm that Greece has ‘defaulted’ on debt in 2015
  
• 10/1: Greece to exit the Euro in 2015
  

The filmmaker who shot Yanis Varoufakis’s Zagreb lecture in 2013 has criticised the media for their coverage of the now-notorious ‘middle finger’ gesture.

Martin Beros says the clip was taken ‘out of context’; German TV, he says, fudged the fact Varoufakis was talking about events back in 2010.

The row shows that many mainstream media outlets aren’t able to engage with and analyse complex narratives, and want to reduce the debt crisis to gestures and posturing, Beros adds.

(hopefully that’s the last word on Mittelfinger-Streit)

There’s no word from Berlin on how the Merkel-Draghi talks are progressing.

But we have heard from Reuters that Greek PM Alexis Tsipras wants to meet them both at the next EU summit on Thursday.

Tsipras is hoping that European Commission chief Jean-Claude Juncker and French President Francois Hollande will also attend, in an attempt to break the deadlock and unlock financial aid for Greece.

It’s unrealistic to expect Greece to repay all its debts, according to a senior Bank of England policymaker.

Alex Brazier, the BoE’s executive director for financial stability strategy and risk, also told MPs on the Treasury Committee this morning that the Greek debt crisis could be a threat to UK companies.

Europe’s jobs crisis eased last year, but there’s still a long way to go.

Eurostat reported that employment across the eurozone rose by 0.9% over the last year, and by 0.1% in the final three months of 2014.

That means the eurozone has clawed back some, but not all, of the jobs lost since the debt crisis began.

Eurostat adds:

Spain and Latvia (both +0.7%), Ireland and Slovakia (both +0.6%) recorded the highest increases in the fourth quarter of 2014 compared with the previous quarter.

Portugal (-1.4%), Cyprus (-0.6%), Poland (-0.3%), Italy (-0.2%) and Malta (-0.1%) recorded decreases.

Readers in Athens may be reaching for the ear plugs today; F16 fighter jets are roaring overhead in preparation for National Independence Day on March 25.

Helena reminds me that the air show was stopped a few years ago; perhaps the new Greek government is keen to celebrate the country’s sovereignty. At least the fuel costs will be lower this year -- given the tumble on the oil price.

It’s official: Alexis Tsipras is off to Moscow next month:

Prices across the eurozone fell by 0.3% year-on-year in February, Eurostat has confirmed, in line with its preliminary estimate.

The data also shows that Greece lurched deeper into deflation, with prices down 1.9% annually.

Britons are spending more on electric cigarettes and craft beer, and less on sat navs and foreign exchange commissions, according to the Office for National Statistics’s annual shake-up of its inflation basket.

The ONS has also added online music streaming, swanky headphones and sweet potatoes to the basket, and kicked out yoghurt drinks, in an attempt to better mirror what we actually spend money on.

More here: E-cigarettes and craft beer added to the CPI basket of goods

Greece’s authoritative Ta Nea is reporting that prime minister Alexis Tsipras has accepted an invitation from Russian president Vladimir Putin to visit Moscow on April 8th.

It comes as the US top diplomat Victoria Nuland holds talks in Athens today amid mounting concerns that a financial collapse of Greece could push the country into Russia’s orbit. Nuland is expected to meet Tsipras at 6pm local time (4pm GMT)

Moscow has said that it would seriously study a Greek request for financial help if ever asked. Athens is playing the geopolitical card in its ongoing negotiations with creditors, points out our correspondent Helena Smith.

And an update on “fingergate” - the latest scandal to ruffle Greek-German relations.

The plot has thickened says Helena Smith, following the Greek finance minister Yanis Varoufakis’ decision to upload the offending video in its entirety on his Twitter account overnight.

What has rather taken the Greek media aback is that the then economics professor is indeed shown making the rude gesture at the 40-minute mark of the filmed talk he presents to a packed audience in Zagreb.

When presented with the video by Germany’s most popular ARD TV program on Sunday, he had denounced the video as “a fake” saying immediately that it had obviously been doctored. Greek commentators are now wondering what to make of it all!

Relations between Germany and Greece continue to deteriorate.

Last night, German finance chief Wolfgang Schäuble said Athens’s new government had destroyed the trust the country had regained with its European partners in recent years.

Athens correspondent Helena Smith reported:

“The new Greek government has totally destroyed the trust of its European partners … this is a serious setback,” the veteran politician, widely seen as the architect of austerity, told a panel in Berlin.

“Until November, Athens was on a road that could have lead it to exit the crisis. This has gone. I don’t know what to do now with Greece.”

The German newspapers, meanwhile, are fixated on whether finance minister Yanis Varoufakis once suggested Greece should have given German ‘the finger’ (as he denied on Sunday).

It makes the front page of the Bild tabloid...

European stock markets have hit new post-crisis highs this morning.

The FTSEurofirst 300 index, which contains the biggest companies across Europe, rose by 0.1% in early trading to its highest level since late 2007.

Volkswagen shares are up 2.2%, after this morning’s car registration figures showed VW sales had jumped last month.

The Merkel-Draghi meeting starts in an hour or so:

There’s a one in four chance that Greece will quit the eurozone by the autumn, sending the euro sliding, says investment bank Morgan Stanley this morning.

Morgan Stanley has also changed its mind about the wisdom of buying Greek debt.....

UK consumers can look forward to falling prices.

Supermarket chain Sainsbury’s has predicted that food costs will keep dropping through 2015, as it reported its fifth quarter of declining sales.

CEO Mike Coupe says:

Food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue.”