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UPDATE 1-Ecofin unlikely to act on Greek aid next week -source

Published 02/12/2010, 05:50 AM
Updated 02/12/2010, 05:54 AM

(This story is filed without a dateline to protect the source's anonymity)

* Market developments trigger for possible Greek aid

* Unlikely Ecofin will make concrete decision next week

* EU leaders try to keep pressure on Greece, Portugal, Spain

Feb 12 (Reuters) - Next week's European Union finance minister meeting is unlikely to decide an aid package for Greece, but adverse market reactions could trigger a decision at any time, an EU government source told Reuters on Friday.

EU leaders at their summit on Thursday aimed to keep pressure high on Greece, as well as on Portugal and Spain, to address deficits and imbalances, while they agreed they would step in with loans as a last resort, the source said.

"I wouldn't expect anything (concrete on financial aid) at the Ecofin next week," said the source, who requested anonymity because he was not authorised to make statements about Thursday's EU summit.

"They (EU leaders) try to keep the pressure on Greece as high as possible, as well as on Portugal and Spain, to do whatever they can now," the source said.

The reluctance to come up with a financial aid programme quickly was based on the fact that leaders felt they had been "fooled" by Greece for years with inaccurate statistics and broken promises, said the source.

"The Greeks have fooled us around for 10 years. That's why nobody is going to rush in a big aid package quickly," he said.

"The ball is in the Greeks' court now. They have protests at home, they have presented a programme that the market as well as the Commission see critically, they need to build up credibility," said the source.

"But if the market reacts aggressively, if the pressure on Greek bonds gets huge, then it can go very quickly," he said.

"The trigger for possible financial aid will be the market reaction, and whether it raises the risk of Greece going bankrupt," it said.

"If there will be anything, it will be credit lines. But for the moment the message is that real financial aid is the last resort."

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