Athens, Greece: Fresh Greek reform proposals submitted to eurozone partners were cheered by France and Italy on Friday, raising hopes that a last-ditch compromise could be reached to prevent a dreaded ‘Grexit’.

The plan handed to eurozone partners by Prime Minister Alexis Tsipras's administration just two hours before a midnight deadline will be submitted to lawmakers in Greece for a vote.

The heads of the EU, IMF and European Central Bank were also to discuss the package later on Friday before a critical meeting of eurozone finance minister on Saturday.

Tsipras has conceded ground on major sticking points including tax and pensions, drawing encouragement from France and Italy–and a terse, neutral response from the normally hardline Germany.

A make-or-break summit bringing together leaders of all 28 EU nations, not just the 19 that use the euro, is scheduled for Sunday, but might not be needed if an agreement is reached beforehand.

Eurozone countries must decide whether to accept Greece's reform plan in exchange for another huge bailout–its third in five years–amounting to tens of billions of euros, or force a ‘Grexit’ from the eurozone.

‘We have to make a major decision. Whichever way,’ said Jeroen Dijsselbloem, head of the Eurogroup of eurozone finance ministers. He said the plan was being evaluated.

In a bid to head off a possible challenge to the measures within his hard-left party Syriza, Tsipras urged his lawmakers ‘to stand united and firm in front of these important decisions.’

French President Francois Hollande, one of Tsipras's biggest allies in Europe, said: ‘The Greeks have shown a determination to want to stay in the eurozone because the programme they are presenting is serious and credible.’

He added however that ‘nothing is decided yet’ and a new bailout package–essential if Greece is to stay in the eurozone and avoid financial meltdown–needs to be approved unanimously by eurozone members.

Italian Prime Minister Matteo Renzi declared himself ‘more optimistic’ that a deal would be done, while Germany said the outcome of crisis talks this weekend was ‘completely open’.

The Greek offer, set out in a 13-page document, concedes to Greece's paymasters on several key points that Tsipras's ruling coalition– and the Greek voters, in a referendum last weekend–had previously fiercely opposed.

‘Greece has come across on almost all issues and has clearly shown its willingness to compromise,’ said Carsten Brzeski, of the German bank ING-DiBa.

‘Whether this will be enough remains to be seen,’ he said in an investor note, emphasising the creditors' lack of trust in Greece.

With caveats, though, he said the ‘chances for a deal and another bailout for Greece have increased again’.

European stock markets rose on news of the Greek proposals. Germany's DAX index rose over 2.0 percent, France's CAC leapt more than 3.0 percent, and the FTSE index of the London exchange – outside the eurozone – added more than 1.0 percent. The euro surged to $1.116.

- Tsipras's gamble - 

The reforms agree to creditors' demands to overhaul pensions, increase sales taxes, and commit to privatisations. But they seek to limit changes on other thorny issues, including tax breaks for Greece's islands and cuts to military spending.

The proposal aims to procure a financing deal ‘for three years, debt adjustment and a front-loaded investment package of 35 billion euros ($38 billion),’ a Greek government source said.

Tsipras is taking a political gamble by making any concessions to creditors' demands.

Hardliners in Syriza and coalition partner the Independent Greeks have obstinately rejected further austerity.

And Greek voters last Sunday roundly voted 'No' to accepting tough conditions attached to the last bailout that expired 30 June.

But the alternative for Greece is grim.

Germany has led a majority bloc of eurozone nations saying that, after two bailouts over the past five years totalling 240 billion euros, and 107 billion euros in debt forgiveness in 2012, Greece is looking like an irredeemable moneypit.

Kicking Greece out of the eurozone, and possibly even the EU itself, was an even call this week, according to analysts. But several on Friday said the odds of Greece keeping the euro had now improved.

Greeks overwhelmingly want to keep the euro. Nearly two weeks of capital controls that have limited daily ATM withdrawals to 60 euros ($67) have alarmed them.

‘The government has to find a deal with its European partners no matter what. We didn't vote 'No' to leave the eurozone,’ said a pensioner in Athens, Nikos Eftekidis.

But another pensioner, Giorgos, said the ‘government's proposed measures are very tough, I wasn't expecting that. That's not what the Greeks voted for.’

Tsipras hopes the measures will pass muster with Germany and other hostile eurozone countries, and open the door to the creditors discussing another round of relief from Greece's suffocating 320-billion-euro ($350-billion) mountain of debt.

Germany, Europe's largest economy, has ruled out forgiving more of Greece's debt, with Chancellor Angela Merkel saying ‘a classic 'haircut' is out of the question for me’.

But her careful choice of words, and an acknowledgement from German Finance Minister Wolfgang Schaeuble that Greece was in need of debt restructuring, hinted Berlin might yet consider a different form of relief, perhaps involving pushing back repayments or lowering interest on loans.