EU 'wants Greece to stay in eurozone'

European Union president Herman Van Rompuy said on Thursday that EU leaders wanted Greece to remain in the eurozone, but stressed that it must live up to its reform promises.

"We want Greece to remain in the euro area while respecting its commitments," said Van Rompuy after a late-night EU summit clouded by fears that the debt-wracked country could depart the 17-nation single currency area.

Van Rompuy said all EU leaders were "fully aware of the significant efforts already made by the Greek citizens" following "considerable solidarity" shown by eurozone partners and vowed to ensure that EU grants and other means of providing aid would be mobilised.

But he underlined: "Continuing the vital reforms to restore debt sustainability, foster private investment and reinforce its institutions is the best guarantee for a more prosperous future in the euro area.

"We expect that after the elections, the new Greek government will make that choice."

An earlier draft drawn up by eurozone officials had highlighted the need for "a sufficient parliamentary majority" following the June 17 vote, but Van Rompuy made no reference to this.

European Commission head Jose Manuel Barroso added: "Let's wait for the people of Greece to have their say", but stressed "we want Greece to remain in the euro area".

Earlier, David Cameron, prime minister of non-euro Britain, called on eurozone heads to sort out the woes of debt-wracked Greece once and for all before they drag the entire bloc into the abyss.

"Of course what we need is a decisive plan for Greece and we need decisive plans to help get the European economies moving," Cameron told reporters.

"But if we're not going to keep coming back and back to meetings like this, we also need to deal with some of the longer-term issues at the heart of running a successful single currency," added the prime minister.

French President Francois Hollande said the Greek people had an "important choice" to make on June 17 when Greece holds its second election in six weeks after a first effort in May failed to deliver a conclusive result.

"This choice must be European and we have to send a signal to Greece. France wants Greece to stay in the eurozone, wants the Greeks to respect the commitments they have already made," Hollande told reporters.

Irish Prime Minister Enda Kenny acknowledged Greece was "a matter of quite considerable concern" but pointed to a "very strong willingness within the Greek population to stay in the euro," a trend backed up by opinion polls.

The June election is shaping up to be effectively a referendum on whether Greece stays in the euro, as parties opposed to austerity measures needed for future bailouts gain significantly in the polls.

The radical leftist Syriza party, which wants to tear up Greece's unpopular bailout deal with the European Union and the IMF, came second on May 6 and is expected to emerge in a strong position in the next ballot.

European leaders have warned that if the next government reneges on promised reforms Greece cannot hope to continue drawing international loans, which would likely lead to its exiting the eurozone.

And with European stock markets and the single currency plunging on the foreign exchange markets over fears of a so-called "Grexit", a diplomat told AFP officials from the other 16 eurozone member states were instructed this week to "reflect" on what an exit would mean for their economies.

This was not a political message to Greece, insisted the diplomat, but was a "normal" thing to do.

"It does not mean that we think the situation will get that far," he said, adding that "you would have said we were dreaming" otherwise.

"This is not about suddenly being told we have to prepare (for exit)," a second diplomat said.

"Treasury officials were already scratching their heads a year ago looking at different scenarios that could unfold," added a third.

"Frankly, it would be dereliction of duty if they hadn't done this," he said.

Reports that eurozone officials were mulling the scenario of Greece leaving the zone ruffled feathers in Athens, however, with a government statement saying the finance ministry "categorically denies" such plans.

Such a report "does not correspond to reality but harms the efforts the country is making to deal with its problems," the Greek statement added.

But former prime minister Lucas Papademos had already set the cat among the pigeons by telling Dow Jones Newswires that a Greek exit "cannot be excluded."

Before setting off by train to Brussels, Hollande had refused to confirm or deny the reports of "Grexit" contingency plans, saying: "I don't have any information like that and, what's more, I don't ask for it because that would suggest that I was preparing for this eventuality."