European leaders said they hope to clinch a deal with Greece this week after the debt-strapped nation finally offered economic reforms that are potentially acceptable to the European Union and International Monetary Fund.
"We are moving towards an accord," French President Francois Hollande said after an emergency summit on the Greek crisis with 18 other European leaders and the IMF on June 22.
"There is still work to be done," he said, before European leaders meet again for a two-day summit on June 25. European finance ministers in the meantime will meet with Greek leaders with the goal of putting together a solution they can present to top leaders at the next summit.
Both Hollande and German Chancellor Angela Merkel said they hope they will be able to sign off on a final deal by the end of the week.
"I'm convinced that we will come to a final agreement in the course of this week, for the simple reason that we have to find an agreement this week," said European Commission President Jean-Claude Juncker.
The IMF and leaders from the 19 euro nations said Prime Minister Alexis Tsipras's new reform plan offered the basis to break a four-month deadlock in talks.
But IMF chief Christine Lagarde said the proposal "still lacks specificity" and is "short of everything we expected."
"There will be room for negotiations," Lagarde said. "Hopefully, we will be constructive in a very short period of time."
In its compromise proposal, Greece is offering about 8 billion euros in higher taxes and austerity measures over the next two years, a Greek government official said.
European Union President Donald Tusk said Greece's plan includes retirement reform and sales tax changes, making it "the first real proposal in many weeks."
The more cooperative spirit gave a boost to stock markets. Athens shares closed 9 percent higher. The Stoxx 50 index of top European shares closed up 4.1 percent.
Wall Street stocks also rose, sending the Nasdaq Composite Index to a new record high.
The need for a deal could not be more pressing. Greece must pay 1.6 billion euros to the IMF in just over a week, on June 30. Further payments are due in July and August, and Athens does not have the money to pay them.
A debt default by Greece could destabilize its banks -- Greeks are already withdrawing increasingly large amounts of money -- and could in a worst case scenario cause the country to have to leave the eurozone.
That would be hugely painful for Greeks but experts are more divided about its effects on Europe and the world economy. Several European countries have said publicly they are getting prepared for the possibility.
The proposals will impose new taxes on businesses and the wealthy but no further cuts in pensions or public-sector salaries, which remain a "red line" for Tsipras's left-wing government.
Athens will make tougher rules on early retirement and shift some categories of goods to a higher sales tax bracket, including hotels and certain foods. Emergency bailout taxes that had been imposed will remain, even though Tsipras had pledged to phase them out.
The Greek official said that employers will have to contribute higher social-security contributions to pension and unemployment funds. He said there would also be a special one-off tax for profitable businesses.
Despite the more upbeat mood in markets, tension was palpable in Greece, where people have flocked to cash machines to withdraw money. The concern is that a debt default by Greece could destabilize the country enough that it might eventually have to leave the eurozone.
"Everyone's going [to the banks] to take money," said Yannis Nikolopoulos in Athens. "If the banks shut, it'll be a problem to go shopping and that sort of thing." Without a deal, he said, "we're doomed."
To support Greek banks in the face of growing money withdrawals, the European Central Bank increased the amount of emergency credit it allows the banks to draw on, officials said.
Reports indicate Greeks withdrew about 4 billion euros last week.