AFP: Greeks woke up to shuttered banks, closed cash machines and a climate of rumours and conspiracy theories yesterday as a breakdown in talks between Athens and its creditors plunged the country deep into crisis.

After receiving no extra emergency funding for Greek lenders from the European Central Bank, Prime Minister Alexis Tsipras sombrely announced capital controls in a televised address on Sunday night to prevent banks from collapsing under the weight of mass withdrawals.

Greece has less than 48 hours to pay back 1.6 billion euros (US $ 1.77 billion) of the International Monetary Fund loans and a default would set in train events that could lead to the country’s exit from the euro currency bloc.

But after Tsipras angered Greece’s international lenders by announcing a snap referendum next Sunday on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough are fading fast. Greeks reacted with a mixture of disbelief and fear.

“I can’t believe it,” said Athens resident Evgenia Gekou, 50, on her way to work. “I keep thinking we will wake up tomorrow and everything will be OK. I’m trying hard not to worry.”

European officials sent confusing signals about their next move. A spokesman for the European Commission told French radio that Brussels would not make any new proposals yesterday, appearing to contradict comments by EU Economics Commissioner Pierre Moscovici. He said a new offer was forthcoming and that the two sides were “only a few centimetres” away from a deal.

European bank shares fell sharply yesterday. Top banks in Spain, France and Germanywere down more than 6 percent as the risk of a spillover to banks in other peripheral euro zone countries spooked investors.

The Greek government will keep banks shut at least until after July 5, the date of the referendum and withdrawals from automated teller machines -- which were shut yesterday -- will be limited to 60 euros a day when they reopen on Tuesday. The stock exchange will also stay shut.

After months of wrangling, Greece’s exasperated European partners have put the blame for the crisis squarely on Tsipras’s shoulders.

The creditors wanted Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.

As Tsipras announced the emergency measures late on Sunday, there were long queues outside ATMs and petrol stations as people raced to take out cash before it was too late.

“I’ve got five euros in my pocket, I thought I would try my luck here for some money. The queues in my neighbourhood were too long yesterday,” said plumber Yannis Kalaizakis, 58, outside an empty cash machine in central Athens yesterday.

“I don’t know what else to say. It’s a mess.”