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Greece loan talks on, EU delays summit

Athens, October 10, 2011

Greece said it concluded talks with international lenders over a vital aid payment on Monday after Germany and France gave investors hope by promising a plan to recapitalise Europe's banks soon.

Chancellor Angela Merkel and President Nicolas Sarkozy gave no details of their proposals, to be delivered by the end of the month, but said they would also cover closer euro zone integration and steps to tackle Greece's debt mountain and prevent financial market contagion.

"The German and French governments are convinced this will be a contribution to the euro zone winning back confidence and its capacity to act - and I do mean a contribution, not the 'miracle cure' everyone keeps asking for," German government spokesman Steffen Seibert said.

The next regular summit of EU leaders was postponed by six days to Oct. 23 to allow time "to finalise our comprehensive strategy on the euro area sovereign debt crisis", European Council President Herman Van Rompuy announced.

"Further elements are needed to address the situation in Greece, the bank recapitalisation and the enhanced efficiency of stabilisation tools (EFSF)," he said in a statement.

The euro and world stocks rose on hopes raised by Sunday's Berlin Merkel-Sarkozy meeting of progress in tackling the crisis that began in Greece two years ago and now threatens the stability of the global economy.

However investors remain cautious due to the lack of detail about the Franco-German plan, and the risk that any solution may be derailed by an event such as political deadlock in Slovakia over approving new powers for the euro zone's rescue fund.

In Athens, Finance Minister Evangelos Venizelos said Greece had concluded talks with European Union and International Monetary Fund officials and expected private bondholders to make a bigger contribution than originally envisaged in a second bailout deal agreed in July.

Greece says it needs an 8 billion euro aid instalment in November to avoid running out of money to pay salaries and pensions. Its next bond redemption is due in December.-Reuters




Tags: Greece | loan talks | EU summit |

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