Eurozone draws line on Greek rescue

European Union leaders have drawn a line in the sand for Greece over its debt rescue, warning before a G20 summit that the bailout is the last offer.

European Union leaders have drawn a line in the sand for Greece over its debt rescue and a shock referendum, warning before a G20 summit that the bailout is the last offer.

The reignited eurozone debt crisis now poses the main risk of recession in the global economy, a central issue for the G20 summit opening on Thursday.

The referendum shock also raises the spectre of Greece leaving the eurozone if Greeks reject the rescue terms, and it has putItaly in danger over its debt mountain.

French President Nicolas Sarkozy, German Chancellor Angela Merkel, top EU leaders and the head of the IMF were to hold Greek Prime Minister George Papandreou to account for the crisis his referendum announcement has relit.

"For us, it is actions that matter. We agreed a program with Greece last week. And from the EU side, at least for Germany, we want to implement this program," Merkel told reporters before flying to the French Rivieria.

"For this, we need clarity and that's what these talks tonight are about," she added.

TAKE IT OR LEAVE IT

And the message from Sarkozy in an unusual statement late on Tuesday and from the German Foreign Minister Guido Westerwelle in Ankara on Wednesday was clear: the complex Greek-eurozone rescue strategy agreed in extremis last week is a take-it or leave-it offer.

Westerwelle said: "The whole program we just agreed last week cannot be placed back on the table."

Sarkozy insisted that the deal "is the sole possible way to resolve Greece's debt problems".

Europe has come under intense pressure from its G20 partners to contain its debt crisis, and after hard-fought negotiations last week came up with a deal that would wipe 100 billion euros off Greece's debt, strengthen banks to weather those losses and more than double the firepower of its bailout fund.

With Greek voters bitter after enduring more than a year of painful austerity measures, markets were spooked by the possibility that it could be rejected, which would likely mean the country would go bankrupt and be forced to leave the eurozone.

European stock markets steadied on Wednesday, after Asian stocks finished mixed but tension on the eurozone bond market increased.

The euro rose to $US1.3804 from $US1.3697 in New York late on Tuesday.

A French government source said Sarkozy and Merkel were set to tell Papandreou on Wednesday that the referendum should be on whether or not Greece stays in the eurozone.

That would be the first time that France and Germany have so explicitly raised the possibility of a country abandoning the euro.

A recent Greek poll indicated that most Greeks favour staying in the eurozone, despite hostility towards the tough rescue conditions.

European Commission chief Jose Manuel Barroso warned that "without the agreement of Greece to the EU-IMF program, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable.

"The consequences would be impossible to foresee."

But German Finance Minister Wolfgang Schaeuble said: "If Greece will accept the burden and efforts required by the aid programs, if it wants to stay within the eurozone, then we will support it."

The Greek referendum announcement blew out of the water European hopes to show up at the G20 summit with a plan to deal with its debt crisis, as well as hopes to secure financial support.

The eurozone's troubles are increasingly threatening to spill outside of Europe and the OECD warned earlier this week a quick resolution was key to ensure a rebound in the world economy.