Riot police shielded Greece's national parliament on Sunday as demonstrators protested against austerity measures on the eve of talks in Brussels on a 130-billion-euro ($171 billion) bailout needed to avert bankruptcy.
Hopes for a deal at the meeting of euro zone finance ministers have risen after Athens last week detailed new budget cuts. But skeptics, led by Germany, are wary about Greece's determination to shrink its debt mountain.
More than 1,000 protesters had assembled outside parliament by mid-afternoon. Demonstrations last Sunday degenerated into looting and torching of buildings in central Athens.
The austerity measures are really hurting pensioners - we can't just sit and take it, said retired state electricity worker Costas Xenakis, 70, whose monthly pension will be hit again by new cuts approved by caretaker Prime Minister Lucas Papademos' cabinet late on Saturday.
Banners such as one reading Down with the memorandum of hunger bore testimony to the anger many Greeks feel towards a political elite that allowed the country over the years to rack up a national debt worth 160 percent of national output while the super-rich took advantage of lax tax collection.
Ahead of an election due in April, a survey released on Sunday showed the two parties that have dominated politics since the 1974 end of junta rule - Socialist PASOK and conservative New Democracy - would muster little more than a quarter of the votes between them, with parties to the left gaining ground.
One survey by pollster MRB showed that while 73 percent of Greeks want the country to stay in the single currency, just 49 percent believe it will manage to do so in the next two years.
After months of often acrimonious negotiations, Greek hopes are rising that Monday's meeting in Brussels will endorse the rescue Athens needs to avoid bankruptcy on March 20 when major debt repayments fall due.
The country last week adopted a second austerity package since 2010, setting out 3.3 billion euros in wage, pension and job cuts, as well as savings on defense and health spending.
On Friday, German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Papademos voiced optimism about a Greek accord during a conference call, Monti's office said.
A government official, who declined to be named, told Reuters that Papademos flew to Brussels on Sunday for talks ahead of Monday's decision. The source did not specify whom he would meet.
WON'T THROW GREECE OUT
Austrian Finance Minister Maria Fekter said on Sunday it appeared a deal was finally taking shape.
I don't think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money, she said in a television interview.
The euro finance ministers and, I believe, the heads of government agree that we will not leave Greece in the lurch in the euro zone and also won't throw it out, Fekter said.
However, Jean-Claude Juncker, who will chair Monday's meeting of the Eurogroup in Brussels, had earlier made clear urgent work was still needed over the weekend to get a program to reduce Greece's crippling debts back on track.
London-based consultancy Capital Economics warned the rescue deal could yet collapse, noting the proliferation of voices suggesting the euro zone might now be better placed to cope with the shock of a Greek default and exit from the single currency.
Some core policy-makers have suggested that the negative effects of a disorderly default might be limited and are therefore willing to walk away if Greece does not agree to additional tough conditions, it wrote.
Aside from the budget cuts, there is a push within the euro zone for Greece's public spending to be put under tighter surveillance.
MISSING THE TARGET
At stake is a target of lowering debt to a more manageable 120 percent of gross domestic product by 2020. EU and IMF officials believe that target - which assumes Greece will run a budget surplus next year, excluding the massive cost of its debts - will be missed.
Under the main scenario of an analysis by the European Commission, the European Central Bank and the International Monetary Fund, Greek debt will fall to only 129 percent of GDP in 2020, one official said.
Critics argue the austerity measures are driving Greece further into recession, with the contraction accelerating to 7 percent in the last quarter of 2011, making it even harder for Greece to pay back its debts. The Greek economy has shrunk 16 percent since 2008, driving up unemployment to over 20 percent.
We are caught in a vicious circle, said Zoe Rapti, a 43-year-old teacher. Austerity brings more and more measures. In a few months they'll be taking more from our pockets.
The euro zone is looking at modifying the deal negotiated over many months with private creditors under which they would accept a cut of around 70 percent in the real value of their Greek bondholdings.
Senior euro zone finance officials meet on Sunday to discuss the analysis and find ways to bring the debt closer to the 120 percent target before the finance ministers gather on Monday.
If you do a number of things you can bring the 129 close to 120, one euro zone official familiar with the document said.
These might include changes to interest accrued on privately held bonds, but the EU and its national institutions might also play their part, the official said.
Interest rates on EU loans to Greece could be cut, and those national central banks in the euro zone which hold Greek bonds might accept similar terms to private creditors.
The national central banks own an estimated 12 billion euros of Greek debt. The European Central Bank has refused to take part in the complex deal for the private creditors, which involves swapping old bonds for new ones with a lower face value, lower interest rates and longer maturities.
($1 = 0.7597 euros)
(Additional reporting by Mike Shields in Vienna; Writing by Mark John and Matt Robinson; Editing by Janet Lawrence)