Hopes of Greek deal remain despite snag in talks

Despite all the tough talk of ultimatums and games of poker, Greece and its creditors in the 19-country eurozone are still expected to cobble together some sort of deal that will allow the country to remain a member of the euro currency.
However, as a Feb. 28 deadline nears, jitters are mounting.

For now, investors and European policymakers are not panicking despite a breakdown in talks between the two sides over the new Greek government's attempt to renegotiate its financial bailout.

That's likely because they've been here before - the eurozone has in recent years often run into moments of brinkmanship, often with Greece. Each time, a deal was clinched in time.

"If Greece were to leave the euro, the financial chaos that would follow could also spell the end of the Syriza-led government," said Jane Foley, analyst at Rabobank International, referring to the radical party that won elections last month.

"For this reason it remains our central view that an eleventh hour compromise between Greece and its creditors is still likely."

They're on borrowed time, though. Though the volatile stock index in Athens actually rose on Tuesday before slipping a mild 2 percent, Greeces government borrowing rates are rising steadily - a sign investors are more wary of a potential bankruptcy.

Nothing's for certain

In markets' sanguine reaction on Tuesday, no one is discounting the possibility that Greece might fail to agree on a deal with its creditors, a development that could have big and unforeseen consequences both for Europe and the global economy.

The latest tension centers on the eurozones ultimatum to Greece to ask for an extension to its bailout program by Friday before further...