BRUSSELS: European leaders hunkered down on Friday for two days of tortuous negotiations to thrash out the terms of a huge post-coronavirus economic rescue plan. Europe is in the depths of its deepest recession since World War II and the 27 leaders are seeking common ground on the terms of a 750-billion-euro stimulus package that would help lift the hardest hit by the pandemic.

There is stern resistance from a group of richer and smaller nations led by the Netherlands and Austria that are loathe to hand out cash to countries such as Spain or Italy they see as too lax with public spending. Germany's Chancellor Angela Merkel turned 66 on Friday and, as she and her 26 colleagues began this first in-person summit since February, they exchanged elbow bumps instead of handshakes and exchanged gifts.

But the high spirits quickly turned sombre once the talks began, with leaders taking their places in an EU headquarters with reduced staff and social distancing imposed. "The differences are still very, very large and I cannot therefore predict whether we will be able to reach an agreement this time," Merkel said as she arrived. "It would be desirable, but we also have to face reality," she said. "That is why I expect very, very difficult negotiations."

France's President Emmanuel Macron described it as a "moment of truth" before beginning the first session of talks that diplomats described as cordial but slow.

Merkel and Macron are backing a recovery package made up of a mixture of loans and subsidies to member states to revive economies shattered by the virus and preventive lockdowns.

"It's our European project which is in play here," Macron warned, before meeting the Netherlands' Prime Minister Mark Rutte - who is holding out against doling out cash without tough conditions and an effective power of veto over national rescue plans.