Greek loan payments backed by the IMF, save time - Bloomberg

Greece wins the approval of the Monetary Fund International for a payment of 3.2 billion euro ($4.6 billion) under a joint loan with the European Union, time-saving the second package of rescue craft policy and avoid the first sovereign default in the euro area.

Greek to secure the loan are "of the important results," Director General of the IMF Christine Lagarde, said yesterday in the Washington Declaration. Again, "a durable budgetary adjustment is necessary, fear that the deficit at a high level of non-viable manner and improve the productivity of reforms should be accelerated, fear that growth fail to recover."

The decision follows the approval of the week last by the Finance Ministers to unblock of EUR 8.7 billion European that talks are continuing on how to include banks and insurers in a new package of the Greece, which can return the year in international financial markets next because of the outbreak of the borrowing costs. The option to engage the private sector has been criticized by the European Central Bank because it could trigger a partial default.

"Greece debt sustainability depends on critical timely and vigorous implementation of the programme of adaptation, with no margin for landslide and support European partners and the involvement of the private sector," said Lagarde.

The IMF, including the loan to the Greece under the original package 110 billion joint euro is the second largest in Fund history, has not publicly discussed his participation in a second rescue plan.

Instead officials such as John Lipsky, acting Director General until Lagarde has taken the lead, this week, focused on the measures necessary for the approved payment yesterday. This included sale of the property of the Government and the insurance that the funding gap left by the failure of the Greece to return to the markets of the next year will be filled.

Passage of the Greek Parliament of further reductions in budget last week gave eurozone governments political cover to release the funds.

Outlook to turn them into reality, the Act of saving are overshadowed by a lack of support from the opposition and public hostility in fighting between the rioters and tear gas - police spraying before the Parliament in Athens last week.

Lagarde said of the Government to sell 50 billion euros of assets by 2015 is a "critical step" in reducing the debt and the growth of seduction.

While the target "is very ambitious, the creation of an independent privatization agency should help to achieve the implementation transparently and in a timely manner," she said.

The Greece received bailout in May 2010, seven months after the country raised its estimated budget deficit of nearly 13% of the gross domestic product, three times higher than earlier forecasts and four times the EU limit. Investor concern about the capacity of the Greece to repay its debt has roiled markets and cause contagion in other countries of the euro area, forcing the Ireland and the Portugal seeking rescues as well.

Greek debt, already at a record in Europe of 142,8% of gross domestic product, is set to rise to 166.1% next year, the forecast of the EU. Efforts to reduce the budget deficit which is about 10% of the GDP dug a third year of recession.

Double disbursements will help Greece roll on approximately EUR 4 billion of bills of maturation from July 15 to July 22, plus approximately 3 billion euros of coupon payments in the month, according to Bloomberg calculations. A test of the largest threat 20 August when 6.6 billion euros of bonds come due.

The Greece, stated by the IMF to be "on the track" in February, turned off the coast of course in April with the disclosure of 2010 more-than-expected deficit, forcing the Government of Prime Minister George Papandreou twist this year budget in additional savings.

To contact the responsible editor of this history: Christopher Wellisz to the cwellisz@bloomberg.net

Banks struggle with Greek bailout (AP)

By JUERGEN BAETZ and GABRIELE STEINHAUSER, Associated Press Juergen Baetz and Gabriele Steinhauser, Associated Press - 42 minutes ago

BERLIN--the largest banks in the euro area will be fighting Wednesday on how much they are willing to contribute to a new package of support for the Greece in debt.

At a meeting in Paris, senior European lenders will attempt to find the terms and conditions by virtue of which they would be willing to buy Greek new obligations, currently considered one of the more risky investments in the world.

The banks are in a delicate position: on the one hand, they must convince countries such as the Germany and the Netherlands, who want to keep the amount of money that they pay as low as possible to the Greece. On the other hand, they want to avoid losses which could impair their results and may cause trouble with the shareholders.

The Governments of the euro area have said that the contributions of the sector private in a new bailout package for the Greece - probably a euro115 extra billion in mid-2014 on the top of European already granted billion a year ago - was to be "serious", but should not be considered a default.

Both goals have proved to be difficult. German banks, said last week that that they would be willing to participate in a reversal of so-called liaison, but their contribution would represent only some certificate billion, given that most of their assets expires after 2014.

At the same time, rating agencies, which became umpires in this exercise, have already indicated that even a relatively mild reversal, as recently proposed by the French Banking Federation, would move Greece in a rating of "selective default" at least for a while and could force banks to Records loss on the affected obligations.

Banks cannot agree on the final terms of rollover at their meeting on Wednesday, under the auspices of the Institute of Finance of the International. "The meeting tomorrow... is part of a series of meetings of the main private creditors in Greece to support the reform program," said Frank Vogl, a spokesman of the IIR, adding that similar gatherings are planned in the coming weeks.

In accordance with the proposal of the France, which has gained traction with Germans, banks lenders would reinvest 50% of their assets in obligations of new Greek with a maturity up to 30 years in exchange for heavy interest rates and be provided by a separate Security Fund.

Already, eurozone governments are more comfortable with power that they have given to the rating agencies. German Chancellor Angela Merkel said Tuesday that the three institutions that oversee the bailout Greek - European Central Bank, International Monetary Fund and the European Commission - should make their own assessment of the roll-over, regardless of what the rating agencies.

"I hope especially the case of these three institutions," said Angela Merkel.

His comments came after that Standard & Poor, said the current French proposal for banks to refinance their Greek debt holdings "constitute probably a default value," while fellow rating agency Moody said banks are record impairment losses on the routes affected.

The ratings are important for the European Central Bank, which will not accept obligations as security that have been noted as "selective default" or worse by all the major agencies. That would have cut the Greek lenders in broad support of liquidity from the ECB and could trigger a major banking crisis in the country.

But the European Union and the ECB have warned that a negative note could cause also to investors of money from other States of the euro area vulnerable, such as the already made-out Portugal and Ireland and much more Spain and the Italy.

Another concern is the credit default swaps, insurance contracts that banks and other investment funds contracted with Greek bonds. If these contracts must be paid is not decided by the agencies rating, but a separate institution, the International Swaps and Derivatives Association, which is controlled by the major investment banks and funds of the world.

___

Steinhauser of Brussels.

Greek Europe's choice: default or rescue - CNN

Greeks have protested in Athens, June 29, when the Parliament approved austerity measures more for more bailout money.

NEW YORK (CNNMoney)--if the Greece finally was his rescue money. But when this temporary financial crutch in the following year, the troubled nation will once more the very real possibility of the default value.

The Greece does not have enough money to pay its debts, and rolling on current debt may not be an option, according to the reports of the three major rating agencies.

McGraw-Hill (MHP, Fortune 500) Standard & Poor, of Moody (MCO) investors Service and Fitch Ratings all defined by default in a manner which includes transfers in certain situations.

Standard & Poor reported Monday that the two funding options presented by the French banking system, which involves the restructuring of the debt by the private sector, would "be likely a default under our criteria."

One of the Chief of the rating agencies concerns is that new supporters of Greek debt might eventually be shoddier ones they are replacing.

Fitch noted that an exchange of debt could result by default if the titles are "worse than the original contract of the terms of the existing debt and where the sovereign is subject to the financial distress."

In addition, the French plan would force banks to take on the impairment because of the difficult financial situation of the Greece, according to Moody.

Desmond Lachlan, resident fellow at the American Enterprise Institute for research of Police public and former policy advisor to the Monetary Fund International, said the rating agencies were "operation very technically" in their analysis of the Greek debt.

Lachlan said he hoped that the European Central Bank to accept debt instruments Greek as collateral, despite their low ratings.

"[The ECB bankers] seem to be indicating that they will accept Greek paper, even if it is evaluated in the default value," he said. "If the ECB did not say that it would play in the Greece."

The Greece debt is set to mature from July 2011 to June 2014. Spectrum default is imminent, but immediately, even if a part of the debt is due this month.

The Greece has enough money to continue the operation, at least in the short term. The Member countries of the euro and the Monetary Fund International has recently approved the last tranche of $ 17 billion in the $156 rescue plan launched last year.

But even with the rescue plan, Greece will eventually run out of money. Fitch said in a recent note, that "deficits of budget financing" would take place in 2012, suggesting that the rescue plan is sufficient to obtain the Greece through the rest of 2011.

The last tranche of the bailout of funding has been approved on the condition that the Greece make of new belt-tightening, in addition to those imposed austerity measures last year.

The original raft of austerity measures that have been applied in 2010 has raised the retirement age to 65 for as low as 61 and tempered eligibility for disability benefits. Also, the taxes have been added to a multitude of products, including fuel, alcohol and cigarettes.

The new measures of austerity, which include reductions in remuneration for public workers, led thousands of demonstrators in the crowd in the streets of Athens, where they clashed violently with riot police.

Many demonstrators were blaming their economic woes rich tax dodgers.

Tax dodging has been generalized in Greece, the national budget, undermine and curb fraud is a major focus of new austerity measures.

Ministers of the eurozone Greek return assistance payment, Shift Focus to the Second rescue plan - Bloomberg

Jean-Claude Juncker, head of the Eurogroup and the Luxembourg, Prime Minister. Photographer: Jock Fistick/Bloomberg.

The euro area has approved its part of an assistance payment of 12 billion dollars-euro ($17.4 billion) for the Greece and is committed to complete the work in the coming weeks a second rescue plan for the nation to short of cash to prevent a default.

Ministers of finance agreed to pay 8.7 billion euros of loans within the framework of bailing out of 110 billion - euros last year before 15 July, rewarding the Greek Prime Minister George Papandreou to push a plan of additional austerity by Parliament. The Fund International Monetary is due to provide the rest of the tranche assistance from July, the fifth under the package of 2010.

Now, the spotlight turned to a second rescue plan to banks and insurers plan to contribute German requests for relief. Investors and Governments in the euro area will provide 70% of the new aid which can total as much as 85 billion euros, with the IMF in providing the rest, Thomas Wieser, an official of the Austrian Finance Ministry, said on June 30.

"The Greek authorities provided a strong commitment to adhere to the agreed budgetary adjustment path," Finance leaders eurozone 17 said in a statement by email yesterday after a conference call that was joined by the acting head of the IMF, John Lipsky and Central Bank President, Jean-Claude Trichet. "The precise terms and the extent of the participation of the private sector and the additional funds from official sources will be determined in the coming weeks."

The obligations of the nations most indebted of Europe has rebounded this happened a week after the victory of Papandreou in Parliament facilitated concerns about imminent Greek default. Stocks and the euro has increased. The obligations of the Greece advanced for a second week and Italian titles in 10 years for the first week in three, while the Spanish performance of 10 years has decreased by more than five months. The Greek performance of two years has fallen more than 150 basis points.

The euro has increased by 2.4% against the dollar, its first weekly gain in four weeks and European Stoxx 600 Index snap a string of eight consecutive weeks of losses. The MSCI World Index posted its biggest weekly advance in nearly two years.

Europe is seeking to draw a line under a debt crisis that the Greece stung more than a year and threatens monetary union for 12 years. The Ireland and the Portugal requested emergency assistance for a total of 146 billion euros after the initial rescue of the Greece in May 2010, and the investors concerned about the vulnerability of some larger euro, including the Spain nations.

The political climate in Europe has complicated the task, with a group led by German of rich countries reluctant to offer more support and opposition to the austerity of Mount Greece. Papandreou stirred his Cabinet last month to repel a rebellion by his Socialist Party and fact face demonstrations and strikes this Greek legislators last week approved a package of 78 billion euro of increases in taxes and asset sales.

The Finance Minister Greek Evangelos Venizelos said the decision by its counterparts in the euro area to release the fifth loan payment strengthens the international credibility of the country.

"What is now critical is the implementation rapid and effective decisions of Parliament," Venizelos said in a statement by email of the Ministry of finance, based in Athens.

The IMF noted a readiness to approve its share of 3.3 billion euro in the next instalment of aid for the Greece. "We look forward to continuing to work with the Greek authorities and the European partners in support of the economic program that will help to restore the financial viability," the Washington - based fund said in a news release by e-mail.

The European Union and the IMF pushed Papandreou in action with a June report that said changes of Greek economic policy is linked came at a "standstill." The lack of progress contributed to derailing the country plan to return to the bond markets next year and led work on a second package of aid.

In may, the EU has warned that the Greece had shifted its course to reduce its budget deficit to 7.4 per cent of the gross domestic product this year from 10.5 per cent of GDP in 2010, saying: failure of this year would be 9.5%. The debt of the countries will be increased to 158% of GDP this year from 143% in 2010, according to EU forecasts of.

Papandreou to the Parliament legislative victory facilitated concerns a Greek default, European Governments reported progress in negotiations with investors in their contribution to a new package of aid through a reversal of the Greek debt.

The heads of finance in the euro area, "Consultations with the creditors of the Greece are in progress to define the modalities of voluntary participation from the private sector to achieve a substantial reduction in year funding needs the Greece, while avoiding the selective default," said the statement. The Eurogroup so-called, directed by Jean-Claude Juncker of the Luxembourg, is due at the next meeting on 11 July in Brussels.

The German and French banks, the largest Greek debt holders, intensified its discussions on a reversal that officials say should be as much as 30 billion euros. Deutsche Bank AG CEO Josef Ackermann predicted on 29 June that financial companies would contribute to help avoid a "crisis."

Under the French proposal, bond would agree with more than 70% of their debt coming due in mid-2014 in new Greek bonds for 30 years, with the main on new debt guaranteed through the Greece invest in bonds coupon of similar maturity. As a second option, investors would drive more than 90% of their debt in five years of the new obligations without warranty.

Member of the Board of Directors of ECB Christian Noyer, said the French proposal is "very well" and can make more credible Greece rescue program. It is in the interest of all financial institutions who could participate in a plan to support Greek, Christian Noyer told newspaper based in Athens Proto Thema in an interview to be published today.

To contact the reporters on this story: Jonathan Stearns in Brussels at the jstearns2@bloomberg.net; James g. Neuger in Brussels at the jneuger@bloomberg.net.

To contact the editor responsible for this story: James Hertling at the jhertling@bloomberg.net

Immediate Greek default prevented, fragile outlook (AP)

By GABRIELE STEINHAUSER, AP Business writer Gabriele Steinhauser, Ap Business Writer - Sat Jul 2, 5: 28 p.m. Eastern

Brussels - Greece has been removed from imminent default Saturday, when the euro-zone finance ministers signed off the coast on an episode of vital loan. But international creditors of the country are showing more concern by whether it can service its debt in the long term.

Athens receive a euro12 billion ($17,39 billion) tranche of the bailout existing European billion before July 15, in time to meet several deadlines for repayment of binding of this month and then the Finance Ministers of 17 countries that share the euro said Saturday night. The euro and the Monetary Fund International will continue to support the faltering economy of the Greece in the coming years, with a second package of aid to be completed by September.

While the renewed commitments save Greece immediate collapse, even its international creditors - for a long time the most optimistic on the prospects for the country - warn that a refund of the debt of 160% of economic output will be a difficult balance.

"The Greek government debt remain for many years at a high level and, therefore, subject to possible adverse developments that cannot be predicted," the European Commission, Directorate of the European Union and one of the three institutions in charge of the Greece rescue, said in a report published Saturday.

Especially below the expected economic growth "would be to the trajectory of debt on the path of a clearly unsustainable," said the commission.

In an illustration showing several scenarios for the Greece debt load, growth of only 1 point below expectations percentage leave the debt of the Greece approximately 170% of the gross domestic product after 2020, with the graph pointing firmly on the rise.

The report, the basis of the decision of the Ministers to release the payment of aid from July and to prepare a new rescue plan, is more pessimistic assessment of the commission yet. Private analysts and economists have long questioned the sustainability of the debt of the Greece. However, the European Union, the European Central Bank and the IMF have so far, at least publicly, confirmed their conviction that the situation of the Greece is manageable.

The Commission retains nevertheless that it is "not unrealistic to think that the Greece may reduce its deficit targets set out in its rescue and thus slowly chip away from debt. But the report makes a point of significant mark on the ability of the country - and will - to implement the reforms his creditors say are necessary to get the economy growing again.

"Solvency depends on politics and social conditions that allow non-implementation of required policies," the warnings of the report.

The warning was a clear ring, after weeks of sometimes dramatic back and forth between the Greek authorities and international creditors of the country, which culminated earlier this week in the narrow passage unpopular new austerity measures in Parliament, in the violent demonstrations in Athens.

"In view of the length, the extent and the nature of the necessary reforms, political and social consensus is a prerequisite for success," the Commission said in its report, repeating calls to European leaders on the opposition of the Greece to begin to support the rescue package.

For the first time, the report also contains a section on the restructuring of debt - including a scenario for a hair cut of 40 percent, a reduction of the value of Greek bonds.

The EU has so far excluded any haircut on obligations, and in his report, the Commission maintains that the negative consequences of restructuring would gain from debt restructuring.

Haircuts of 40 per cent would devastate Greek banks, sweeping capital cushions and the outbreak of massive deposit flight, the Commission warned. Restructuring of debt of the Greece also risk of "create a permanent change in the mood of investors and lead to prophecies come true for the other vulnerable Member States"-a shortcut for was already in Ireland and Portugal, as well as weak as States the Spain or the Italy.

The report stresses that fate of the Greece will be probably decided by what is happening in the country as well as by external conditions, it has little influence, such as global economic growth that it would provide a better market for exports.

These factors tend to overshadow any decision on a second rescue plan, which was simply the Greece buy more time, and the exact nature of the participation of the private sector, the main open issue in discussions on a new rescue plan.

Eurozone finance ministers are currently trying to find a way to get banks and other private creditors to contribute to a new aid program. Since restructuring forced - or any movement that triggers a negative reaction to the rating agencies - has been rejected, banks will likely be undertake to re-invest part of the money they get to their existing Greek bonds expire new debt at a lower interest rate.

However, several analysts have already pointed out that such a regime would be very expensive for the Greece and will not reduce its overall debt burden.

Zone Euro-nouvelle Greek slice OK Sat, 2nd package decide July 11 - Reuters

(Refiles to remove the redundant Word global)

By Jan Strupczewski

(Brussels, July 2, Reuters) - Finance Ministers of the zone Euro will approve the next instalment of emergency aid for the Greece on Saturday and to take decisions on a second plan for three-year funding for Athens on July 11, responsible of the zone euro said.

The release of the tranche of 12 billion euros ($17 billion) of the euro and the Monetary Fund International was made possible after the Greece passed new austerity and reform the laws on Wednesday and Thursday, removing the threat of a default value in the short term.

"The conditions are now in place for a decision on the payment of the next instalment of funding for the Greece and to move quickly on a second package of assistance," European Commission President José Manuel Barroso and the President of the European Herman van Rompuy said Thursday.

The second programme of funding for the Greece is from 2011 to 2014 and will come on top of the output of EUR 110 billion program agreed with the countries of the euro and the Monetary Fund International last year.

The Ministers are unlikely to give further details on the second funding program much after Saturday, which will focus on the releasing of the next instalment of the aid for the Greece, official sources said euro area.

"Any reference to the successor (the second rescue of the Greece plan) program will be of according to what has been said in recent days," said the top euro official source.

Leaders of the European Union has made a clear commitment for the second program at the last Summit of June 23-24, which should satisfy the condition of the IMF that the euro area must commit to funding the Greece 12 months for the IMF to contribute.

The leaders said in a statement the Greek votes "will provide the basis to implement the main parameters of a new program supported jointly by its partners in the euro zone and the IMF, in accordance with current practices."

They said also for financing program would be taxpayers euro area but a substantial, but a voluntary contribution of private investors via a reversal of the Greek debt.

Additional external funding for the Greece in this period, the public and private money, could be about 80-90 billion euros, officials said. The Greece should raise another 30 billion euros of privatization at the moment.

WHAT IS THE EXTENT OF THE PRIVATE SECTOR

Finance Ministers of 17 countries with the help of the euro and the European Central Bank President Jean-Claude Trichet are likely to discuss in a conference call Saturday how many of the 80-90 billion euros would come from the private sector.

Private financial institutions held talks with the Finance Ministry and Central Bank representatives in various countries of the euro area last week to discuss under what conditions the private sector would be willing to help finance the Greece and for how much.

The participation of the private sector in the next package for the Greece is a must for several countries in the euro area to provide more money for the Greece as voters grow more and more opposed to the burden of bailing the Greece on their own.

But the participation of the private sector must be voluntary to not trigger a downgrade of Greek debt default status by the rating agencies - a development that could put the Greek banking sector at risk.

The Institute of International Finance, a global association of financial institutions, issued a statement Friday said the "private financial community is ready to engage in a voluntary, cooperative, transparent and comprehensive effort in support of the Greece, held of his unique and exceptional circumstances."

The German Finance Minister Wolfgang Sch?uble said German banks wanted to roll over 3.2 billion euros worth of Greek bonds maturing in 2014.

French banks have reached an agreement on how to ride on a portion of their holdings of Greek debt, said French President Nicolas Sarkozy, but did not indicate the total amount.

FOCUS ON NEXT SLICE

Release more money for the Greece of the existing program will be the main tangible outcome of the Conference of Ministers appeal, which is to begin at 1600 GMT Saturday, and that could produce a statement, said the officials.

"" The Ministers will really focus the meeting on the range of 5. "."The fact that they do not respond in person means that there is no major obstacle to decide on this, euro zone official, who asked not be named, said.

"They can exchange information on the status of informal contacts which were also held with the private sector, which is one of the many issues in the second program and how they will organise discussions on 11 July."

The July 11 meeting is to finalize the second package of funding for the Greece, but officials said they would not surprised if the final decision on the second package is only made by the Ministers of finance in September.

The appeal, Ministers are also likely to discuss the status of the Finland to help with new whereby the Greece must provide guarantees for the part of the loans guaranteed by the Finland with ease European financial stability (EFSF).

"We have a political solution and we will find a technical solution in a timely manner," a second euro zone source involved in the discussions on the Greece, said. (Statement by Jan Strupczewski, mounting by Matthew Jones) ($1 = 0.705 Euros)

The euro area to approve Greek aid tranche, Berlin requires action

A woman raises a Greek flag during a rally against austerity across the Parliament instead of the Constitution (Syntagma) in Athens on June 30, 2011.

Credit: Reuters/John KolesidisBy Jan Strupczewski

BRUSSELS | SAT 2 July 2011 6 pm EDT

Brussels (Reuters) - will Ministers of Euro zone finance approve the next instalment of emergency aid for the Greece Saturday and discussed a plan of financing the second three years in Athens on July 11, responsible of the zone euro said.

The release of the tranche of 12 billion euros ($17 billion) of the euro and the Monetary Fund International was made possible after exceeded Greek Parliament of austerity and to reform the laws on Wednesday and Thursday, removing the threat of short-term debt default.

"The conditions are now in place for a decision on the payment of the next instalment of funding for the Greece and to move quickly on a second package of assistance," European Commission President José Manuel Barroso and the President of the European Herman van Rompuy said Thursday.

But in Germany, which funds much of the part of the European Union of the Greece rescue, said that laws must be transformed into action. "Decisions of the Parliament are one thing and their implementation," said the Minister for Foreign Affairs Guido Westerwelle.

"What is most important, if we want to strengthen the common European home and Greece, in particular, is it" said it Greece to Vima newspaper dans a published interview Saturday.

Athens failed on several occasions to meet budget targets set out in the first last year agreed with the EU and the IMF rescue plan International, increasing the risk that the crisis will spread across the euro area.

Second Greece program is to run from 2011 to 2014 and will come at the top of the current programme of EUR 110 billion.

The Ministers are unlikely to give many new details on the funding program second after their discussions, which will be held on the phone at 1600 GMT. Official sources of the zone euro said teleconference on Saturday would concentrate mainly on the releasing the next tranche of the aid for the Greece, the fifth rescue of last year's agreement.

"The Ministers will really focus the meeting on the fifth instalment." "The fact that they do not meet the person mean that there is no major obstacle to rule on this point," said official euro zone, who asked not be named.

Leaders of the EU is committed to the second program at their last Summit on June 23-24, which should satisfy the condition of the IMF that the euro zone must promise to finance the Greece 12 months for the IMF to contribute.

They said also for financing program would be taxpayers euro area but a substantial contribution from voluntary private investors via a reversal of the Greek debt.

Additional external funding for the Greece in this period, the public and private money, could be about 80-90 billion euros, officials said. The Greece should raise another 30 billion euros of privatization at the moment.

WHAT IS THE EXTENT OF THE PRIVATE SECTOR

On Saturday, Finance Ministers of 17 countries with the help of the euro and the European Central Bank President Jean-Claude Trichet are likely to discuss how many of the 80-90 billion euros would come from the private sector.

Private financial institutions held talks with Finance Ministry and Central Bank representatives in the countries of the euro area last week to discuss under what conditions the private sector would be willing to help finance the Greece and how much.

The participation of the private sector in the next package is a must for several countries in the euro area as voters grow increasingly more opposed to the burden of bailing the Greece on their own.

But the participation of the private sector must be voluntary to not trigger a further downgrade of Greek debt default status by rating agencies, a development that could put the Greek banking sector at risk.

The Institute of International Finance, a global association of financial institutions, said Friday that the "private financial community is ready to engage in a voluntary, cooperative, transparent and comprehensive effort in support of the Greece, held of his unique and exceptional circumstances."

The German Finance Minister Wolfgang Sch?uble said German banks wanted to ride on a value of 3.2 billion euros from the Greek obligations coming due in 2014.

French banks have reached an agreement on how to ride on a portion of their holdings of Greek debt, said French President Nicolas Sarkozy, but did not indicate the total amount.

Another meeting on 11 July will help finalize the second package of funding for the Greece, but officials said they would not surprised if the final decision was taken by the Ministers of finance in September.

(reports by Angeliki Koutantou Athens, additional editing by Matthew Jones and David Stamp)

Greek Parliament should endorse the austerity second Bill (Reuters)

Athens (Reuters) - the Greece Parliament should pass a second Bill of austerity Thursday to allow the country to avoid bankruptcy by getting a slice of loan of 12 billion euros ($17 billion) of the EU and the IMF.

After two days of violent demonstrations just metres (yards) from where members adopted an initial act of austerity on Wednesday, they began to discuss detailed measures to implement EUR 28 billion in spending cuts, increases and privatization.

Dangerously close Greece to the default value that would trigger chaos on the financial markets, the European Union and the Monetary Fund International demanded that the two bills of austerity transmitted before it releases the next batch of bailout EUR 110 billion agreed last year.

In a hand for Socialist Prime Minister George Papandreou, the conservative opposition said it is willing to support measures in the second vote after having opposed the first invoice of austerity.

"We will do our utmost to support the Government," said the legislator of the new democracy Nikos Dendias, a former justice Minister. "We will vote for two chapters of the Bill today."

Parliament resumed debate at 9: 30 am (0630 GMT) and the decisive vote was not expected to begin before 2 pm (1100 GMT) with results emerging some time in the afternoon.

Voting will be by roll-call, with members called to vote on both the general principle of the Bill and of the individual articles. Papandreou has called a meeting of the Council of Ministers after the vote.

While the Socialist lawmakers are expected to back the legislation as a whole, some said that they opposed individual clauses, such as increases in a levy on heating oil and an increase of the minimum income tax threshold.

In an effort to convince the undecided, new Minister of finance Evangelos Venizelos offered some concessions on tax increase as threshold exempt from tax for families with children.

The first austerity Act, which describes the hard program cuts and selloffs, passed by 155 votes to 138. Approval of the second would allow euro-zone finance ministers delete the release of EUR 12 billion at a meeting Sunday.

Approval by the IMF is expected on July 5, averting the immediate threat of failure.

After that, attention will switch to a second rescue plan, roughly equivalent to the EUR 110 billion rescue plan agreed in May 2010, including the Greece needs to continue until 2014.

UPCOMING ISSUES

Global stocks rallied Thursday for the third consecutive day and the euro reached its highest level of the dollar in 20 days on a sense of relief that looked like Greece to avoid the first bankruptcy of debt in the euro area.

Calm returned Thursday two days of violent protests that have blocked the city centre and the Centre of Athens, who was paralyzed during a strike for 48 hours from the ground by the powerful labor unions sectors public and private.

Teams of street cleaners swept broken masonry and broken glass after a night of clashes in the vicinity of square Syntagma right in front of the Parliament.

But protest banners and tents remained in place Syntagma, where demonstrators camped during more than a month show their anger at austerity measures at the wheel of many Greeks to despair in the worst recession since the 1970s.

"The implementation Act will pass, without problems," said Costas Panagopoulos, head of pollsters ALCO. "The problem for Papandreou is not in the Parliament, it is what is happening outside of Parliament: not implemented Syntagma, which is a few hundred demonstrators, but with all of the Greece 11 million people."

With the ordinary Greeks to years of standard of living fall as the Government struggles to slash a mountain of debts amounting to more than 150% of the gross domestic product, transforming action laws will be a major challenge.

Unions and promised to oppose privatization promised de s' de s' à des à des à des syndicats et promis de s' opposer à des privatisations ont promis de s' à des de s' à des privatisations opposer promis opposer ont de s' de s' de s' à des privatisations à des privatisations opposer opposer opposer à des privatisations opposer promis opposer promised opposer ont de s' à des privatisations opposer promis opposer ont. The Socialists, which interrupted the process of privatization of the Greece when they came to power, must sell 5 billion euros in assets this year or risk missing the targets within the framework of its EU agenda and the IMF, which would have cut funding once more.

"If Papandreou and Venizelos miss this last chance, and not to pursue the necessary reforms and a true skin of grief in the State of waste, they and the country will be an explosive situation in the fall at no way out"centre-right daily Kathimerini wrote in an editorial."."

(Additional by Harry Papachristou and George Georgiopoulos, written by James Mackenzie; editing by Mark Heinrich)

Oil near $95 in the hopes for the resolution of the Greek debt (AP)

BANGKOK - oil fluctuated below US $95 per barrel Thursday in Asia after the Greece of an austerity plan approval procedures eased concerns about a spreading of the financial crisis in Europe.

Oil of reference for August delivery fell 27 cents to $94.50 US per barrel at Bangkok late afternoon electronic trade on the New York Mercantile Exchange. Gross earned $1.88 to settle at $94.77 Wednesday.

In London, Brent crude for August delivery was off the coast of $1.18 $112.22 ice future exchange.

The dollar lost ground to the euro and other major currencies, which boosted the oil as well. Oil, which is priced in dollars, tends to increase while the greenback falls and makes crude cheaper for investors holding other currencies.

Oil was recovered in the last two days of losses since last Thursday, when the 28 - nation International Energy Agency said that it would be 60 million barrels of crude from available stocks of emergency to help lower prices.

He got a boost as Greek legislators prepared for and adopted financial reforms which were necessary for the country receive the next part of a package of aid. Without this money, the risk of countries default on its debts.

Gross of nearly $115 at the beginning of the month dropped last in the fears of slowdown in demand in Europe and the United States.

Other Nymex trading in July, contracts, heating oil fell 2 cents to 2.90 $ a gallon of gasoline dropped 1.9 cents per gallon to $2.99. Natural gas futures lost 4 cents to $4.28 per 1,000 cubic feet.

German banks said that he agreed with the Government on the Plan of deployment on Greek debt - Bloomberg

Banks and insurers Germany hold Greek sovereign debt expiring in 2014 to approximately 2 billion euros ($2.9 billion) and EUR 4 billion that expires in 2020, the people said.Photographer: Hannelore Foerster and Bloomberg Finance Minister Wolfgang Sch?uble the Germany. Photographer: Michele Tantussi/Bloomberg.

Most large banks of the Germany and the insurers and the Government have agreed on a draft proposal to refinance the assets of Greek debt, said those familiar with the plan.

Financial firms will undertake to provide funding for a Greek aid package and an announcement is scheduled for this afternoon, said the people, who refused to be identified because the talks are private. The project could still be amended at a meeting today with Finance Minister Wolfgang Sch?uble and top industry leaders, said the people.

Banks and insurers Germany hold Greek sovereign debt expiring in 2014 to approximately 2 billion euros ($2.9 billion) and EUR 4 billion that expires in 2020, the people said. The project left open how much debt would be reappointed or under what conditions the plan should be carried out, they said.

To contact the reporter on this story: Aaron Kirchfeld in akirchfeld@bloomberg.net Frankfurt

To contact the responsible editors of this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans in the eevans3@bloomberg.net

Dangers lurk beyond vote of the Greek Parliament - Reuters

By Daniel Flynn and Leigh Thomas

ATHENS/PARIS. Thursday, June 30, 2011 6: 00 pm EDT

Athens/PARIS (AFP) - the Greek Parliament was created to approve austerity and bills of privatization Thursday to get emergency funds and to avoid imminent bankruptcy, but the long-term dangers lurk again.

The euro and global stocks rose after first voting Wednesday to adopt a five-year plan of austerity despite fierce public opposition pay more and cuts budget, investors expressed relief that the immediate implosion was averted.

Belgian Finance Minister Didier Reynders said, as a result, euro-zone finance ministers were likely to agree to release a next tranche of loans to the Greece at a meeting Sunday.

This loan of EUR 12 billion will prevent the default Greece mid-July or no later than August 20, when it must honour a redemption of leap and move the focus to a second package of assistance that could be on the same size that the EUR 110 billion bailout last year.

But the credit insurance markets are still pricing in 40 per cent for the holders of bonds on three-year debt likely chance of 80 per cent of the Greece by default on its mountain of debt of 340 billion euros--150% of economic output annual - in five years and a devaluation.

Socialist Government of Prime Minister George Papandreou may find it difficult to meet increases in taxes and sales of State assets against resistance mass public, while still violent fringe in Greek political life has erupted in the foreground.

The rioters armed with stones and clubs fought several hours of battles with police shooting running huge clouds of tear gas at the Centre of Athens into the early hours of the morning, leaving a field of debris from street cleaners remove.

"The law of implementation will be without problems," said Costas Panagopoulos, head of pollsters ALCO.

"The problem for Papandreou is not in the Parliament, it is what is happening outside of Parliament: not implemented Syntagma, which is a few hundred demonstrators, but with all of the Greece 11 million people."

FLIPPING TALKS

Of creditor European countries of the North, led by Chief Treasurer in Germany, insisting that the holders of private sector must share the cost of any other rescue, to intensive talks are underway on a "voluntary" Greek debt rollover due to expire.

German banks were due to discuss a plan of French capital that has attracted widespread with the officials of the Ministry of finance Thursday, but differences remain on incentives for private investors and ensures the possible official.

President of European Central Bank, Jean-Claude Trichet, who has repeatedly warned the EU against the outbreak of a credit event or the decommissioning of the devastating Greek debt, gave a cautious response to the French proposal in testimony to the European Parliament.

"At this stage, we have not yet (has obtained a position...), we are very alert but I can't give you a precise judgment on what is happening." There are several concepts when asked, "he says. "We advise against all concepts that are not purely voluntary."

Three banking sources told Reuters Wednesday that politicians and bankers were convinced that the implementation of the French plan would not trigger a payment of credit insurance or a defect that would inflict losses on the banks.

The banks had received positive signals from the rating agencies that they would not undermine the plan turning by default, the sources said.

But officials warned that many details of the plan, especially if there is no official warranty remaining to negotiate.

"We had a lot of discussions at the technical level to see what are the best solutions," Reynders said, adding that a decision could be taken by European Ministers of finance meeting on July 11 and 12.

"RISK OF IMPLEMENTATION".

As Athens recovered from a night of violence, market concerns displaced against the risk of a lack of immediate disorder for the first time in the eurozone at the prospect of medium term of a debt restructuring Greek.

"There are still risks of implementation in the coming months, but for the moment, the risk of default was taken off the coast of the table as long as through today's vote, said strategist of the Bank Lloyds Eric Wand."

It provides renewed pressure on the obligations of the weakest countries in the euro area on the edge of the area of the single currency after a short respite.

"There should be a brief interruption in the periphery-bashing we've had over the past few weeks, but other problems".

Those included the perspective of the early Spanish elections and bickering in the coalition of center-right of the Italy, while the country faces a downgrade rating of credit.

Office of the Italy is due to adopt Thursday a plan more ambitious deficit reduction than expected initially intended to save EUR 47 billion by 2014 to try to deal with a loss of solvency.

But the partners of the coalition of Prime Minister Silvio Berlusconi Northern League said that the Government is at risk on planes to the retirement age and reduce spending.

Greek Parliament should endorse the second Bill of austerity

Overview of the Greek as Parliament Prime Minister George Papandreou spoke (C) Athens, June 29, 2011.

Credit: Reuters/Giannis Liakos/ICONBy Dina Kyriakidou and Renee Maltezou

ATHENS | Thursday, June 30, 2011 6 pm EDT

Athens (Reuters) - the Greece Parliament should pass a second Bill of austerity Thursday to allow the country to avoid bankruptcy by getting a slice of loan of 12 billion euros ($17 billion) of the EU and the IMF.

After two days of violent demonstrations just metres (yards) from where members adopted an initial act of austerity on Wednesday, they began to discuss detailed measures to implement EUR 28 billion in spending cuts, increases and privatization.

Dangerously close Greece to the default value that would trigger chaos on the financial markets, the European Union and the Monetary Fund International demanded that the two bills of austerity transmitted before it releases the next batch of bailout EUR 110 billion agreed last year.

In a hand for Socialist Prime Minister George Papandreou, the conservative opposition said it is willing to support measures in the second vote after having opposed the first invoice of austerity.

"We will do our utmost to support the Government," said the legislator of the new democracy Nikos Dendias, a former justice Minister. "We will vote for two chapters of the Bill today."

Parliament resumed debate at 9: 30 am (0630 GMT) and the decisive vote was not expected to begin before 2 pm (1100 GMT) with results emerging some time in the afternoon.

Voting will be by roll-call, with members called to vote on both the general principle of the Bill and of the individual articles. Papandreou has called a meeting of the Council of Ministers after the vote.

While the Socialist lawmakers are expected to back the legislation as a whole, some said that they opposed individual clauses, such as increases in a levy on heating oil and an increase of the minimum income tax threshold.

In an effort to convince the undecided, new Minister of finance Evangelos Venizelos offered some concessions on tax increase as threshold exempt from tax for families with children.

The first austerity Act, which describes the hard program cuts and selloffs, passed by 155 votes to 138. Approval of the second would allow euro-zone finance ministers delete the release of EUR 12 billion at a meeting Sunday.

Approval by the IMF is expected on July 5, averting the immediate threat of failure.

After that, attention will switch to a second rescue plan, roughly equivalent to the EUR 110 billion rescue plan agreed in May 2010, including the Greece needs to continue until 2014.

UPCOMING ISSUES

Global stocks rallied Thursday for the third consecutive day and the euro reached its highest level of the dollar in 20 days on a sense of relief that looked like Greece to avoid the first bankruptcy of debt in the euro area.

Calm returned Thursday two days of violent protests that have blocked the city centre and the Centre of Athens, who was paralyzed during a strike for 48 hours from the ground by the powerful labor unions sectors public and private.

Teams of street cleaners swept broken masonry and broken glass after a night of clashes in the vicinity of square Syntagma right in front of the Parliament.

But protest banners and tents remained in place Syntagma, where demonstrators camped during more than a month show their anger at austerity measures at the wheel of many Greeks to despair in the worst recession since the 1970s.

"The implementation Act will pass, without problems," said Costas Panagopoulos, head of pollsters ALCO. "The problem for Papandreou is not in the Parliament, it is what is happening outside of Parliament: not implemented Syntagma, which is a few hundred demonstrators, but with all of the Greece 11 million people."

With the ordinary Greeks to years of standard of living fall as the Government struggles to slash a mountain of debts amounting to more than 150% of the gross domestic product, transforming action laws will be a major challenge.

Trade unions have promised to oppose privatization and other austerity measures. The Socialists, which interrupted the process of privatization of the Greece when they came to power, must sell 5 billion euros in assets this year or risk missing the targets within the framework of its EU agenda and the IMF, which would have cut funding once more.

"If Papandreou and Venizelos miss this last chance, and not to pursue the necessary reforms and a true skin of grief in the State of waste, they and the country will be an explosive situation in the fall at no way out"centre-right daily Kathimerini wrote in an editorial."."

(Additional by Harry Papachristou and George Georgiopoulos, written by James Mackenzie; editing by Mark Heinrich)

Oil climbing 2.5 pct before Greek austerity vote (AP)

NEW YORK - oil climbed to more than 2% Tuesday ahead of a vote in Greece to approve difficult new financial reforms which would consolidate its economy at Bay.

Reference West Texas Intermediate acquired $2.28, or 2.5%, to settle at $92.89 per barrel Tuesday on the New York Mercantile Exchange. In London, gross Brent added $2.79 or 2.6%, to settle at $108.78 per barrel on the ICE Futures Exchange.

On its own financial problems of the Greece would not normally move global oil prices. But analysts say that if the country fails to pay its bills, his problems could spread to neighboring countries and undermine the economy of the European Union.

Reinforced of the euro against the dollar and led like oil. Oil, whose price is U.S. currency tends to increase as the dollar weakens and makes the barrels of crude cheaper for investors holding foreign funds.

Greek legislators will vote Wednesday and Thursday on a $ 40 billion austerity plan. Riots broke out in Athens Tuesday as spicy legislators new taxes, spending cuts and other reforms. The austerity plan is required for the country to receive money from rescue of the European Union and the Monetary Fund International.

Oil rose despite the weak another reading on consumer confidence in the United States, the largest consumer of oil in the world. A private research group said the consumer confidence slipped to a minimum of seven months on worries of work increased.

MasterCard SpendingPulse reported in its weekly survey that consumers purchased an average of 390.3 million litres of gas per day in the four weeks ending June 24, down 0.2 percent from the same period last year. It was the 14th consecutive decline for the average of four weeks in the MasterCard survey, based on credit card purchases.

During this time, the United States retail gasoline is passed to an average national $3.551 per gallon. A gallon of unleaded is less expensive that it was the last month, but it is always higher than the same period last year 79.5 23.9 cents cents.

In the other trade Nymex contracts in July, oil heating added 6.01 cents to settle at $2.8415 per gallon and future gasoline added 7.12 cents to settle at $2.8156 per gallon. Natural gas increased by 10.1 cents to settle at $4.357 per 1,000 cubic feet.

Stocks advance on the Greek austerity vote hopes (AP)

LONDON - world stocks pushed more Tuesday as investors grew hopeful that Greek lawmakers will pass a vote on another round of austerity measures should stop any imminent conversation the country default on its debts.

The majority of 300 deputies have to approve the austerity euro28 billion ($40 billion) project in a vote Wednesday. If Parliament gives its support to the budgetary and tax increases, then the Greece be able to get his next batch of rescue - a value of euro12 billion Fund - to rescue the European billion last year.

Without the funds of the rescue plan, the country would be cash in the middle of July. This type of failure would hit banks everywhere in Europe and could potentially destabilize the markets.

The measures, however, are are unpopular and Greek unions were striking Tuesday hoping to put pressure on legislators to vote against the package. Tuesday, riot police battled protesters hurling bombs of fire, as lowered thousands in the street in protest at the austerity Bill.

"Despite the general strike from today, there still appears to be an optimistic tone that austerity measures will be passed tomorrow and the rescue plan may proceed to the next step,", said David Jones, Chief Strategist at IG Index market. "There is still much that could go, but the way in which markets have performed over the last two days, some hope that finally sentiment took a turn and it is time to recovery."

In Europe, the FTSE 100 index leading British shares closed up to 0.8% 100 to 5,766.88 then that CAC-40 the France increased from 1.5% to 3,851.89. Germany DAX ended 0.9 percent higher at 7,170.43.

In United States, pink stocks, helped by new fairly positive dwellings. Real estate prices have increased in April in 13 of the 20 cities s/Case-Shiller index Standard & Poor. The index hit Records lows in March.

The Dow Jones industrial average was 0.9 per cent to 12,149, then as the future Standard & Poor of 500 more wide increased from 0.8% to 1290.

Expectations that passes the Greek austerity package has helped to consolidate the euro over the last few sessions, but if the measures fail, and analysts believe the euro could face some heavy selling.

"A positive outcome to the vote tomorrow in the Greek Parliament is largely to be expected and should provide only a moderate euro impulse," said Vasily Serebriakov, the Wells Fargo Bank currency strategist. "In contrast, the currency could face significant disadvantage in the scenario less likely measures did not pass."

By times of London from late afternoon Tuesday, it was 0.3 per cent to $1.4363.

Even if the Greece Gets the next batch of rescue funds, many economists believe that the country will have to restructure its debt euro340 billion mountain sometime in the years to come. Some believe that it is possible, that it may arrive even earlier.

"The real problem, however, is that the Greece is ever more unlikely to hit the targets of renewed austerity which means we may be not further forward to the next review of the IMF program in September," said James Nixon, Co-Chief European Economist at Societe Generale.

Earlier in Asia, Japanese Nikkei 225 climbed to 0.7 per cent to close at 9,648.98, but shares of Nestle South Korea fell by 0.4% to 2,062.91. Hong Kong Hang Seng gained 0.3 percent to 22,114.23. S & P/ASX 200 closed Australia 0.3 percent higher to 4,474.30.

Actions ?? Chinese roses, too, with the edge of Shanghai Composite index less than 0.1 per cent higher at 2,759.20, while the Shenzhen Composite index has gained 0.3 percent to 1,152.00.

The retrieved oil prices lost some ground following the decision of the week last by the International Energy Agency to release 60 million barrels of crude oil in 30 days. Oil from reference for August delivery was up to $1.16 to $90 US per barrel in electronic trade on the New York Mercantile Exchange.

____

Kelvin Chan in Hong Kong contributed to this report.

46 hurt in clashes on eve of Greek key vote (AP)

By ELENA BECATOROS and DEREK GATOPOULOS, Associated Press Elena Becatoros and Derek Gatopoulos, Associated Press - 19 minutes ago

Athens, Greece - hours of riots outside Parliament Greece 46 people injured Tuesday, on the eve of a vote by the lawmakers to adopt more painful austerity measures left - a condition for the Fund to rescue necessary to prevent a potentially disastrous default.

At least 14 in were arrested, authorities said, such as preventing youth police riot-and-stop for more than 10 hours and dans at night, leaving the city centre full of dotted with marble broken-up paving stones and tear gas. Union began a 48-hour strike farm services and staged rallies massive through the capital in another day of chaotic protest.

The new austerity measures must be transmitted in a vote of the two parties on Wednesday and Thursday, if the Greece international creditors are to release the next batch of Fund to rescue the country European billion euro12 billion - and to avoid a failure which could drag down banks and shake up the European and global economy.

"Vote of these measures is necessary to maintain our credibility in the (rescue) process," said Finance Minister Evangelos Venizelos. "Vote for these measures, regardless of any reservation, is an important, courageous political responsibility Act."

The Socialist Government, which survived a revolt by party dissidents earlier this month, is again taking their imposing the new four-year program punishes reduced spending and increase tax on the even those on minimum wages - which prompted anger in Parliament and out on the street. The Government has a majority of only five seats in the 300 Member Assembly.

More than 5,000 police will be once again on part Wednesday in an attempt to thwart plans by protesters to block access of legislators in Parliament.

"Austerity measures are not only hard, only unjust step, but they are also ineffective," Socialist criticism Vasso Papandreou said Parliament late Tuesday. However, it reluctantly, she would vote for the Bill.

"The Greece a lot of problems, but the real problem is the euro area, said Papandreou, a former European Commissioner." "Europe should be an area of solidarity, but is the jungle where banks can do what they love."

Police and health officials said 37 officers and nine demonstrators were injured in clashes Tuesday. The rioters set fire to giant sunshades at an outdoor café, with some to form barricades and smashed Windows of output a McDonalds and other snack shops. Staff of the hotels high range given surgical masks to tourists and assisted with luggage after the riots, on a floor strewn with rubble.

Later, youth set fire to a truck satellite parked near the Parliament, which rolls downhill on a booth with freezer exploded. Youth hooded steal behind the truck on fire to help themselves to ice cream cones.

"Travelling workers is tragic and we are near poverty levels, said Spyros Linardopoulos, a protester with the PAME union blocked the port of Piraeus earlier in the day." "The Government has declared war, and in this war we will respond back with the war".

Unions have attracted 20,000 demonstrators at rallies in Athens Tuesday, and plan more downtown protests Wednesday that most services will remain closed.

Fighting will be disturbed by both between 8 a.m. and noon and between 6 a.m. and 10: 00 am (0500-0900 GMT and 1500-1900 GMT).

Members of the eurozone bailout Greece, Portugal and the Ireland are that about 6% of the area of the common currency of output but caused a crisis for monetary Europe project.

"I hope that the Greek political leaders are fully aware of the responsibility which is on their shoulders to avoid default," business monetary European Commissioner Olli Rehn said Tuesday.

___

Personal television Menelaos Hadjicostis, Demetris Nellas and AP and photographers in Athens has contributed.

France, banks agree Greek debt proposed: source

PARIS. Sun June 26, 2011 5 pm EDT

PARIS (AFP) - the French Government and the banks have agreed to a proposal to a reversal of the Greek debt more acceptable to creditors, a banking source, said Sunday, confirming a report in the daily Le Figaro.

Under the plan, creditors would reinvest 70 percent of the refunded products when Greek debt will be due, with 50% enter links Greek new with a duration of 30 years instead of five years, the newspaper said on its Web site.

These bonds would pay a base rate of interest similar to what the Greece is paid on the loans of the European Union and the IMF, with a view to win an additional bonus if Greek economy grows strongly investors.

The 20 percent could be reinvested in a zero coupon funds "securities of high quality," which would accumulate interest to be paid at maturity, said Le Figaro.

"It's a French Banking Federation solution," the source said, confirming that the report in Le Figaro was "close to reality."

The French Finance Ministry was not available for comment. The French Banking Federation refused to comment on.

German banks, which say that they have up to 20 billion euros ($28.3 billion) of exposure to the Greece, called for the State to guarantee their risk with taxpayer money should they participate in a form any debt overturned.

The Greek Government will attempt to pass a very unpopular set of austerity measures this week so that it can receive the next tranche of 12 billion dollars-euro rescue loan to avoid default on the debt which matures in July.

The Greece agreed a package of 110 billion euros of loans from the EU and the IMF in May 2010 but must now a second plan rescue of a size similar to meet its obligations until 2014, when it wants to return to the capital for the financing markets.

Finance Ministers the euro area said that they will define in early July, "main settings" of a new international bailout plan.

German Finance Minister Wolfgang Sch?uble, told Bild am Sonntag he expected from private creditors participate voluntarily in a second rescue plan, also points out that the Greece would not receive the next tranche of aid if the Government austerity plans were vetoed.

The Greek Parliament is due to vote Wednesday and Thursday on measures which include 6.5 billion euros this year additional austerity measures and savings of EUR 22 billion for 2012-2015 reduce deficits and keep qualifying with the EU and the IMF.

Deputy Prime Minister the Greece, said Sunday that rebel lawmakers can block certain reforms sought by the international donors, although Parliament would probably return an overall package of austerity.

(Reports by James Regan;) (Editing by Daniel Flynn and Peter Graff)

Greek rebel MPs can stop austerity reforms: Deputy PM

Demonstrators gather opposite the Parliament during a rally against the economic austerity and corruption in the Syntagma (Constitution) square in Athens on June 26, 2011.

Credit: Reuters/John Kolesidis

ATHENS | Sun June 26, 2011 6 pm EDT

Athens (AFP) - the Prime Minister of Greece warned Sunday that rebel lawmakers can block certain reforms sought by the international donors but the Parliament would probably return an overall package of austerity this week to avoid sovereign default.

Despite rear warnings of policy of the European Union, conservative opposition of the Greece continues to defy the appeals for national unity to pass vital legislation, keep up the pressure on the Socialist Prime Minister George Papandreou.

Parliament is due to begin debating Monday program of increases in taxes and spending cuts 28 billion euros ($40 billion) over five years.

Papandreou needs the approval of Parliament this week to secure the payment of the next tranche of 12 billion euros of EU rescue and the IMF, vital if the Greece is to avoid becoming the first nation of eurozone default on its debt next month.

EU officials want to private creditors participate with a "voluntary" Greek debt rollover avoid a defect which would send shockwaves through the world financial system. A large part of the debt is held by French and German banks.

Sunday, a source of the France Bank, confirming a report in the daily Le Figaro, said that the Government of the France and the banks had agreed on a proposal of a barrel. Creditors would reinvest 70 percent of the proceeds of Greek debt, receive new bonds with actions and longer deadlines in a zero coupon funds.

Deputy Prime Minister Theodore Pangalos said newspaper El Mundo of the Spain, that it was optimistic to overcome the frustration of his party to win the first vote Wednesday, the tax and spending and create an agency for privatization targets.

"The package of measures of short and medium term with which we hope mainly to establish the framework for reform will be approved without difficulty," Pangalos told the newspaper in an interview.

It is more prudent to know if the Government could push through measures of a specific budget later, the day the legislation and the privatization of property of the specific State.

"This is where we can have problems." I don't know if some of our legislators will vote against it. "It is possible."

With the Greece unable to return to the international bond markets next year, as foreseen under the current program EU/IMF 110 billion euro, European leaders are working on a second rescue of a similar size plan, including a contribution of the private sector banks would agree to "voluntary" Greek debt reversal.

THE STREETS OF ANGER

Many Greeks who have lost their jobs or saw their real incomes decline by almost a fifth on the last two years reacted with anger at the prospect of new measures, that they say does not target the rich tax evaders and responsible for corrupt politicians to the spiral of debt of the Greece.

With Government lawmakers reluctant to support more austerity to public protests, party Papandreou PASOK has seen its slim majority reduced by five defections during the 13 months, leaving with 155 seats in the 300-member Parliament.

In a rare piece of good news for Papandreou, one of the two legislators PASOK, who announced they would vote against the package appeared to be faltering Sunday after discussions with the Finance Minister Evangelos Venizelos at the weekend.

"A moment I turns to a"no", the other towards a 'yes'." "I will make a last minute decision," Thomas Robopoulos told Reuters. A third socialist MP said that he will support the agreement only if Venizelos gives assurances on some measures.

Exert pressure on the Government, unions have called a national strike for two days from Tuesday. Many companies, including the main group of mob power which is scheduled for next year, a partial privatization began rolling cases.

Pangalos, who after a cabinet overhaul this month shares the title of the Prime Minister of his Deputy with Venizelos, believes that the conservative opposition would vote for certain measures.

But new democracy leader Antonis Samaras became a deaf ear to calls from home and abroad to support the package, saying that the painful measures would only deepen worst recession of the Greece in 37 years.

"You cannot ask for more taxes in a country already premium, in a market which has been sucked dry, with economic activity to zero and a huge recession," he said in a statement.

These days, European leaders added their voices to calls to the Greek Ministers to approve the measures and to avoid a default.

"The stability of the entire euro zone would be in danger and we must quickly ensure that the risk of contagion for the financial system and other countries in the euro area could be contained," the Minister of finance German Wolfgang Sch?uble said German Sunday newspaper Bild am Sonntag.

Venizelos, who took over the finance portfolio to the redesign of last week, has won the EU agreement and the IMF inspectors Thursday to additional measures that it hopes can put finance public back to maintain after that he did not meet the targets its international program.

The steps include a one-time solidarity levy on income, an increase in tax on heating fuels and the lowering of the allocation of non-taxable income to EUR 8 000 per year from 12,000.

Many Pacific nearly 1000 people gathered Sunday on the place Syntagma outside Parliament, which was protected by a line of riot police.

With unemployment of youth work to approximately 40 per cent, many of those who took the streets in protest or camped Syntagma in the last month are young people who fear the measures may aggravate their prospects dim economic.

"The choice is not between on the one hand to vote for the bankruptcy failed, but between economic and social growth and social cohesion, on the other, or measures", said the left-wing Coalition, a small opposition party, in a statement.

(Other reports by Tracy Rucinski in Madrid and James Regan in Paris.) (Editing by Peter Graff)

The inevitable Greek debt restructuring: El-Erian of PIMCO

Mohamed El-Erian, President and Co-Chief of the PIMCO investment, is interviewed on the 2011 the Milken Institute Global Conference in Beverly Hills, California on May 2, 2011.

Credit: Reuters/Fred Prouser

WASHINGTON. Sun June 26, 2011 12: 00 am EDT

WASHINGTON (Reuters) - sovereign of the Greece the debt restructuring is inevitable, investment officer PIMCO Co-Chief Mohamed El-Erian said Sunday, warning the problems the nation could "contaminate" Europe.

"It is inevitable that the Greece will have to restructure its debt." "Europe has been kicking can, on the road, address the problem of the Greece not as a problem of solvency, but as a problem of liquidity," he said on "fareed zakaria gps" program of CNN.

The Greece is at the edge by the defaulting on its huge public debt. The Government is seeking parliamentary approval for an unpopular set of austerity measures demanded by the European Union and the Monetary Fund International to release a cruelly slice of a loan of 12 billion euros ($17.2 billion).

The Greek Parliament is due to savings of EUR 22 billion for 2012-2015 reduce deficits and keep qualifying EU - IMF and voting Wednesday and Thursday on measures that include 6.5 billions of euros of austerity measures additional to this year.

It also accelerated the sale of State assets under a program of privatization of EUR 50 billion.

"The Greece has too much debt and cannot grow until these problems are resolved." More Europe will be contaminated, "said El-Erian, who helps oversee 1.1 billion of dollars in assets to PIMCO, the world biggest Bond Fund Manager."

While the public finances at the United States crack, El-Erian said that the country was fundamentally different from the Greece, adding that he had much more time to deal with its fiscal policy issues.

"It feeds the dollar as reserve currency, it provides deeper financial markets, which means that other countries were willing to outsource their economies," said.

PIMCO remains bearish on the U.S. government debt. El-Erian said that PIMCO found the best value in treasuries outside the United States.

"It is a question of the assessment." U.S. bonds have benefited enormously from the reserve Federal purchase then program (quantitative easing) of2, which terminates at the end of June, "he says.

"So when we look at the Treasury bills, see us the large buyer stepping away from the market and ask who else is going to be buying at these levels, and we cannot identify another purchaser of the size of the Fed."

El-Erian said that the market has underestimated the impact of the end of $ 600 billion to buy bonds the Fed Government program, which aimed to stimulate the economy by lowering interest rates.

(Reporting by Lucia Mutikani; editing by Jeffrey Benkoe)