European policy makers expressed confidence that a deal with Greece was within reach after Prime Minister Alexis Tsipras’s government submitted a last-minute set of proposals they said could end a five-month standoff over aid.

Greek stocks and bonds surged as officials meeting in Brussels on Monday said that progress had been made toward meeting the terms of creditors, including in the contentious areas of pensions and revenue. While the set of reform measures was delivered too late for a full appraisal by euro-area finance chiefs, unlike prior proposals it wasn’t rejected out of hand and officials said it could form a basis for a deal.

“I’m of the opinion that we’ll achieve an agreement with Greece this week,” European Commission President Jean-Claude Juncker told reporters in Brussels after meeting with Tsipras. “This won’t be easy, we will work at this -- just like we did over the last two days and nights -- but my goal still is that by the end of the week we’ll find an agreement.”

Attention now shifts to an emergency summit of leaders from the 19 euro countries later on Monday, when Tsipras will have a chance to put his case to German Chancellor Angela Merkel and French President Francois Hollande. With work still to do to flesh out the Greek proposals, a second, scheduled summit beginning Thursday is the more likely forum for a deal.

Greek stocks extended an earlier rally with the Athens Stock Exchange Index closing 9 percent higher, its biggest gain on a closing basis since Feb. 3. Greek government bonds also advanced, with the yield on the two-year bond falling 511 basis points to 23.8 percent. The 10-year yield fell 150 basis points to 11.2 percent.

The Greek government said its proposals included steps to eliminate early retirement options, as well as hiking the sales tax, increasing tax surcharges that middle- and high-income earners pay and introducing a levy on companies with annual net income of more than 500,000 euros ($568,000).

Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of his euro-area counterparts, told reporters that the package submitted by Athens was “broad and comprehensive” and a positive step.

Finance ministers asked the three creditor institutions -- the European Central Bank, the International Monetary Fund and the European Commission -- to work with Greek authorities and “start immediately on these proposals,” said Dijsselbloem.

David Fuller's view

Assuming an agreement is reached before the end of June, the EU will regard this as a victory in line with its long-term goals.  Moreover, it has certainly put a floor under European stock market indices.  Fair enough but I fear we have not heard the end of Greece’s economic problems, although I hope to be wrong on this. 

Hopefully, this agreement will keep Russian and Chinese Navies out of Greek ports, although I would not bet on that over the longer term.

The struggle to keep Greece within the EU on anything close to acceptable terms probably strengthens David Cameron’s hand in negotiating terms for the UK over national economic and political control, prior to the UK’s ‘In-Out’ Referendum scheduled before the end of 2017.  My current perception is that this will be a close vote if terms do not ensure considerably more than what Cameron has indicated so far.     

(See also: The euro does not have a problem… it is the problem, by Liam Fox, MP)