Greek stocks fell nearly 4 percent on Tuesday and 10-year debt yields remained above 11 percent, following disputed reports that the International Monetary Fund (IMF) had suggested Greece needed further debt relief from its creditors.
The U.K.'s Financial Times newspaper reported on Tuesday that Poul Thomsen, an official at the IMF—one of the "Troika" of bodies supervising Greece's bailout program—had told euro zone finance ministers at a recent meeting in Riga that Greece would require debt relief.
The suggestion hit Greek stocks and bonds hard, leading broader European markets downwards on Tuesday.
European officials rushed to deny that any debt hair cuts were only the cards, with a reforms-for-loans package with Greece still under negotiation.
"This issue can only be discussed after we have agreed a reform program, which I hope will be consistent, detailed and complete," said European Union Economic and Monetary Affairs Commissioner Pierre Moscovici, according to Reuters.
Germany's disciplinarian Finance Minister, Wolfgang Schaeuble, also rebuffed the Financial Times report.
"The IMF of course did not make such a comment," Schaeuble told foreign reporters in Berlin, according to Reuters.
He added that Greece had not fulfilled any of the prerequisites that could lead to its bailout supervisors discussing such a measure. He conceded that the IMF had warned that Greece's financial situation was worsening, but denied the body was insisting on further debt relief.
"We have said in the past that by 2015 if Greece has accomplished the program, which is not the case as we have extended it, we could consider it," he said.
"The prerequisite was the accomplishment of the program, with a primary surplus and that Greece in general would have fulfilled its obligation and would need more financing, in that case we would have raised the option. But you see all these three prerequisites have not been met."
Meanwhile on Tuesday, Greece blamed "serious" policy differences between the European Union and the IMF for holding up bailout discussions, according to Reuters.
"Serious disagreements between the IMF and the EU are creating obstacles and big risks in the negotiations," a Greek government official said in a statement, according to the new wire.
Irrespective of what the IMF has or hasn't said, Greece is rapidly running out of cash and facing huge loan repayments to the IMF.
Italian Finance Minister, Pier Carlo Padoan, confirmed on Tuesday that Greece could soon run out of money.
"Liquidity is running out in Greece, it's a matter of a couple of weeks and the Greek authorities have to come up with concrete reform proposals," he told CNBC.
Padoan said he was confident, however, that at the next meeting of the Eurogroup of euro zone finance ministers on May 11, there would be "tangible results" so that Greece would be able to receive a final tranche of aid worth 7.2 billion euros ($8.1 billion).
Thomas Wieser, the head of the Eurogroup Working Group, also expressed confidence, telling CNBC on Tuesday he was confident a deal would get done before bankruptcy or crisis ensued.
Talks continued on Tuesday, with Greece's Deputy Prime Minister Yannis Dragasakis and Deputy Foreign Minister Euclid Tsakalotos—who is now heading negotiations with Greece's lender—meeting the head of the European Central Bank, Mario Draghi in Frankfurt.
Meanwhile, Greek Finance Minister Yanis Varoufakis looks set this week to repeat the whirlwind tour of European capitals that he took shortly after taking up the post in February.
Varoufakis traveled to Paris on Tuesday for talks with French counterpart Michel Sapin Tuesday, before heading to Brussels for talks with Moscovici.
He will then return to Paris for talks with French Economy Minister Emmanuel Macron, according to the Greek newspaper To Vima, before heading to Rome to meet Italy's Padoan on Wednesday.
A visit to Madrid is likely to follow later in the week suggesting Varoufakis might return to the fore after being sidelined from stalled negotiations with lenders and euro zone officials.
—By CNBC's Holly Ellyatt and Katy Barnato. Follow us on Twitter: @CNBCWorld