ECB to keep Greek banks afloat till Sunday: Merkel

Speaking at a news conference after an emergency summit of euro zone leaders, Merkel said she was "not exaggeratedly optimistic" of a solution to rescue Greece on Sunday but the summit had been called "because we think the situation is so dangerous".

Asked if Greece could crash out of the euro zone if it failed to put forward convincing reform proposals, she said Sunday's summit would decide whether to open negotiations on a two-year program for Athens.

The leaders had not discussed the idea of Greece possibly creating parallel currency, Merkel said.

She said the euro zone stood by a 2012 commitment to look at debt relief for Greece if it fulfilled the conditions, but there could be no question of a debt haircut, which would be illegal under the EU treaty.

(Writing by Paul Taylor; Editing by Alastair Macdonald)