Host Angela Merkel greeted Obama in the idyllic Alpine village of Kruen under blue skies, surrounded by locals in traditional dress, drinking beer and eating white sausage and pretzels.

The German chancellor was hoping to secure commitments from her G7 guests to tackle global warming ahead of a major United Nations climate summit in Paris in December. The German agenda also foresees discussions on global health issues, from Ebola to antibiotics and tropical diseases.

But the crises in Ukraine and Greece seemed likely to overshadow the discussions at Schloss Elmau, a luxury Alpine hotel near the Austrian border.

European Commission President Jean-Claude Juncker, speaking before the start of the summit, voiced exasperation with Greek Prime Minister Alexis Tsipras, who has dismissed the latest aid-for-reform proposal from international creditors as "absurd".

Athens is running out of cash and will default on its debt, a move that could end up pushing it out of the euro zone, if it fails to reach a deal with its European partners and the International Monetary Fund (IMF) in the coming weeks.

Juncker reaffirmed that a so-called "Grexit" was not an option being considered, but said this did not mean he could "pull a rabbit out of a hat" to prevent it.

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