The high profile sequence of events began when Spain's Economy Ministry said Minister Luis de Guindos declared at a conference in the northern city of Pamplona that a new bailout for Greece could provide between 30 billion euros and 50 billion euros.
Its "central scenario for Greece is a deal on the basis of the current bailout, and new conditions to be set with flexibility," de Guindos said in comments circulated by the ministry to media outlets clearly stating that a round of negotiations were underway for a third Greek bailout.
"We're negotiating a third bailout for Greece that will be between 30 and 50 billion euros ... Greece will not leave the eurozone," the minister said, according to comments distributed to media outlets including The Associated Press by his ministry. "That would not be good for Greece and for the eurozone."
But the eurozone's top financial official quickly denied the claim that fresh bailout talks were underway.
The bailout that de Guindos outlined "is not something that is being discussed," said Simone Boitelle, the spokeswoman for Jeroen Dijsselbloem, who is both finance minister for the Netherlands and chairman of the Eurogroup body of eurozone members of which de Guindos is a member.
A Greek finance ministry official, speaking on condition of anonymity because of ministry policy preventing the official from being named, also denied any talks were being held. Prime Minister Alexis Tsipras has previously ruled out a third bailout.
Five hours after de Guindos' comments were disclosed, his ministry put out another statement saying de Guindos only outlined "a hypothetical third program for Greece" that would have to be negotiated by the Eurogroup.
Greece received a four-month extension on its rescue loans agreement but will need to make reforms in order to get more money. It faces a cash crunch as early as this month.
De Guindos' initial comments and his ministry's subsequent correction came a day after Spanish Prime Minister Mariano Rajoy responded angrily to his Greek counterpart's claim that Spain and Portugal have formed "an axis of forces" trying to overthrow Greece's newly elected far left government.
Rajoy on Sunday said neither Spain nor Portugal were "responsible for the frustration" generated by Greece's new government, led by the Syriza party.
Syriza was elected in January with the promise to scrap budget austerity in Greece and overhaul the country's bailout deal. It has received some domestic criticism after the deal for an extension of the bailout ensured some austerity would continue.
Tsipras had singled out Spain and Portugal as "aggressive European conservative forces" that hope to bring down his government.
Rajoy countered by saying that Syriza had "promised the Greeks something they knew that they would not be able to deliver." He also noted that Spain, despite its own financial crisis, had aided Greece in existing bailout programs with "more than 26 billion euros ($29 billion)."
EU spokeswoman Mina Andreeva said the bloc's executive Commission is "building bridges and bringing parties together" in the dispute after receiving a complaint from both Spain and Portugal.
Raf Casert in Brussels and Elena Becatoros in Athens contributed to this report.