European Union leaders, advised by senior officials to prepare contingency plans in case Greece decides to quit the single currency, urged the country to stay the course on austerity and complete the reforms demanded under its bailout programme.
After nearly six hours of talks held during an informal dinner, leaders said they were committed to Greece remaining in the euro zone, but it had to stick to its side of the bargain too, a commitment that will mean a heavy cost for Greeks.
"We want Greece to stay in the euro, but we insist that Greece sticks to commitments that it has agreed to," German Chancellor Angela Merkel told reporters after a Wednesday evening summit in Brussels dragged long into the night.
Euro zone tensions rose again on Thursday with grim signals from business, and a flight of capital into Germany after an EU summit disagreed on solutions to the crisis.
The latest surveys of business confidence showed the worst monthly fall in May for nearly three years, to 45.9 points on the Markit PMI index from 46.7 in April, with anything less than 50 signalling slowdown
Clouds over Germany
Exports and consumer demand are cushioning Germany against recession, data showed on Thursday, but crisis clouds are gathering over Europe's biggest economy as business confidence fell sharply.
The German economy expanded by 0.5% in the first three months of 2012, the federal statistics office Destatis calculated, with a 1.7% rise in exports and a 0.4% rise in consumer spending helping to avert a recession. But at the same time, the Ifo economic institute said its closely watched business climate index dropped to 106.9 points in May from 109.9 points in April.
The US dollar climbed to a 20-month high and safe-haven German bonds set record low yields. The slowdown in economic activity in Europe's powerhouse Germany sent the euro down sharply against the dollar to $1.2515, its lowest level since July 2010. However, shares staged a modest rebound after sharp falls on Wednesday and commodity prices mostly gained.