* Eurogroup's Juncker expects Slovakia to sign by mid-July
* Slovak PM Radicova says will discuss on Wednesday
* EFSF will not issue bonds without aid request-CEO
* EU to focus more on debt, broaden sanctions for offenders (Adds news conference after Eurogroup meeting)
By Jan Strupczewski and Marcin Grajewski
BRUSSELS, July 12 (Reuters) - The euro zone's emergency loan facility should be operational this month, finance ministers said on Monday, expressing hope Slovakia would cease to block the activation of the 440 billion euro ($554 billion) fund.
The special-purpose vehicle, called the European Financial Stability Facility (EFSF), is being set up to provide temporary financing to euro zone countries in trouble and its triggering needs the signatures of all 16 countries in the currency area.
Slovakia has refused to sign the EFSF's framework agreement because parties that won elections there in June have been opposed to the mechanism, blocking the process.
At their monthly meeting, called the Eurogroup, euro zone finance ministers called on Bratislava to honour its commitments.
"We made clear in today's discussions that our expectation was that the Slovak government will sign the framework agreement (on the EFSF) and take on board all the commitments made by the previous Slovak government," Eurogroup Chairman Jean-Claude Juncker told a news conference after the meeting.
Juncker, who will meet Slovak Prime Minister Iveta Radicova on Tuesday, had said earlier: "I do think that Slovakia will sign up before mid-July. The instrument (EFSF) will be available without any doubt before the end of the month."
Radicova said after meeting EU President Herman Van Rompuy that Slovakia's parliament and cabinet had to be consulted before the country could sign off on the EFSF. The Slovak cabinet would discuss the issue on Wednesday, she said.
Pressure on Slovakia to unblock the EFSF is mounting because the fund is a crucial part, together with stress tests of EU banks, of Europe's efforts to restore confidence in financial markets after the Greek debt crisis.
Of the 16 euro zone members, 15 have signed the EFSF framework pact and 13 are shareholders of the Luxembourg-based SPV. The missing three -- Italy, Belgium and Slovakia -- will be shareholders once they complete national procedures.
The EFSF's chief executive, Klaus Regling, reported the state of preparations for activation of the special-purpose vehicle to euro zone finance ministers on Monday.
"We are almost fully operational if there is a need," he told the news conference.
Asked whether the EFSF, to establish itself on the markets, could issue a small amount of bonds without any request for financing from a euro zone country, Regling said:
"From a purely financial market perspective it might help to do that, on the other hand it is the political will of euro area ministers not to do it before we get a request for financing."
Without a request for financial help, the EFSF would have a problem over what to do with the cash it raised.
"That is not a situation we want to be in," he said.
STRESS TESTS
While the EFSF seems unlikely to be required to bail out a euro zone government anytime soon, it could come in handy to recapitalise some of Europe's banks after the results of stress tests on lenders are released on July 23.
EU finance ministers join euro zone colleagues on Tuesday and will discuss what information to release from the stress tests of 91 EU banks, or 65 percent of its banking sector.
They will discuss what back-stop mechanisms they can use to recapitalise banks if necessary, as not all countries have, like Spain, dedicated funds for that purpose.
"The overall banking sector is resilient but at the same time when we publish the results of the stress tests we will have to prepare for pockets of vulnerability and it is essential national backstops will be in place," European Economic and Monetary Affairs Commissioner Olli Rehn said.
He said vulnerable banks should first try to recapitalise themselves by tapping private investors and public money should be used only as a last resort. If governments exhaust their funds, they can turn to the EFSF -- once it is operational.
If it is not, EU countries would still be able to tap a 60 billion euro EU loan facility that is guaranteed by the EU budget, which, unlike the EFSF, is already fully operational.
The euro fell against the dollar on Monday on concerns about the results of the stress tests.
Some in the market said the euro had been knocked by a German magazine report that the tests would include a haircut on German sovereign debt under certain conditions, countering reports last week that the tests would exempt German haircuts.
Analysts said the efficacy of the tests would depend on how much detail they included, and the possibility the results may be thin on in-depth information was weighing on the euro.
"First it is said they (the stress tests) are much too strict, that this is killing the banks. The next day it is said they are too weak and have no effect. The truth is mostly in the middle," German Finance Minister Wolfgang Schaeuble said.
"I think the decision to extend the stress-test scenarios and to publish the results ... is an important step to end insecurity on the markets about the situation of the banks in Europe. That is the objective of the exercise. I hope we achieve that," he said before the euro zone ministers' meeting.
To boost market confidence further in EU fiscal policies, the bloc's finance ministers agreed on Monday to start monitoring each others' budget plans from 2011, focus more on reducing debt and broaden sanctions for EU budget rule-breakers.
In a statement after a meeting of the ministers, EU President Herman Van Rompuy, who chaired the talks, said the group also agreed to monitor competitiveness in the bloc through a scoreboard of indicators.
Should the indicators fall below certain levels, the ministers would issue policy recommendations under a new procedure for excessive imbalances.
Ministers will meet for a special session on Sept. 7 to discuss a permanent crisis resolution mechanism. (Reporting by Ecofin team, editing by Dale Hudson)