* Euro zone ministers to discuss Irish debt crisis
* Dublin says help may be needed for banks, not state
* Euro group chairman says bailout request not imminent
* Finland says no aid for banks without adjustment programme
(Adds Finnish objection, Spanish pressure, default insurance)
By Timothy Heritage
BRUSSELS, Nov 16 (Reuters) - Euro zone finance ministers will try to find a way out of Ireland's debt crisis on Tuesday, with Dublin resisting calls to seek a state bailout by contending that only its banks may need help.
Dublin is under pressure from the European Central Bank and euro zone peers to take a quick decision on applying for aid amid signs that market contagion is spreading to fellow struggler Portugal and could infect bigger states.
The Irish government, trying to protect a slim parliamentary majority, says it is talking to European partners about how to provide stability for its banks but denies that a state rescue is needed to stop its problems spilling into other countries.
"I would hope after the Ecofin meeting this afternoon and tomorrow there would be more logic introduced into this," Ireland's European affairs minister, Dick Roche, told BBC Radio.
"There is no reason why we should trigger an IMF or an EU-type bailout."
Luxembourg Prime Minister Jean Claude-Juncker, who chairs Tuesday's talks in Brussels, said Ireland was not even close to asking for a Greek-style bailout, which would involve tough austerity terms enforced by the European Commission and the IMF.
But the Irish opposition said moves were already under way.
Several governments, including Finland and France, argue that Dublin cannot receive loans to shore up its banks from the European Financial Stability Facility (EFSF) or the smaller European Financial Stability Mechanism (EFSM) without submitting to a full EU/IMF adjustment programme, euro zone sources said.
"The rules on these two aid systems ... are unambiguous, the country must commit to a strict adjustment programme, which will remove the original cause," said Martti Salmi, an adviser to the Finnish finance minister.
Finland, which requires parliamentary approval to contribute to an EFSF rescue, argues that Ireland can only request help if its government is unable to raise money on capital markets, and any European loan should be backed by collateral drawn from healthy Irish bank assets, the sources said.
FULLY FUNDED
Ireland's public borrowing needs are funded until mid-2011, but its bond yields have soared in the past week and its state-guaranteed banks are largely shut out of inter-bank lending and reliant on the ECB for funds.
This has helped push up the borrowing costs of other countries on the 16-country euro zone's periphery, such as Spain and Portugal.
Spanish Treasury Secretary Carlos Oacana pressed Ireland on Tuesday to come to a resolution over its debt crisis quickly to end market uncertainties.
"The important thing is that Ireland makes a decision as soon as possible," Ocana told reporters in Madrid.
The Irish coalition government has been reluctant to apply for assistance, partly because it faces a by-election it can ill afford to lose on Nov. 25 and also because it says it wants to preserve its sovereignty.
Dublin has hinted it may ask for funding to support its banks, which were driven into debt by the global financial crisis and a property market crash, rather than requesting a politically embarrassing state bailout.
SPILLOVER
The cost of insuring Irish, Portuguese and Greek debt against default edged up on Tuesday as peripheral euro zone bonds remained under stress ahead of the Brussels finance ministers' meeting, which promises to be heated.
"The market thinks there is going to be some sort of deal and it's just a matter of time before it's announced," one London trader said.
He said the Irish/German 10-year bond yield spread would tighten sharply if a deal were announced, but markets would then turn their attention to other debt-laden states like Portugal.
Portuguese Finance Minister Fernando Teixeira dos Santos told the Financial Times there was a high risk that his country would have to seek international aid because markets were lumping Greece, Ireland and Portugal together.
But he later told Reuters there were no plans for Lisbon to request emergency foreign funding.
European Central Bank Vice-President Vitor Constancio said that if Ireland decided to request aid, which it had not yet done, it would not necessarily force other countries, such as his native Portugal, to follow suit.
At their monthly meeting, the euro zone finance ministers are likely to praise Ireland's planned 2011 budget cuts, which face a parliamentary vote of approval next month. They are joined for talks on Wednesday by the other EU finance ministers.
They are also expected to discuss the future euro zone crisis resolution mechanism, which Germany wants to start from 2013, replacing the 440-billion-euro European Financial Stability Facility set up after Greece sought help in May.
EU sources say possible aid under discussion for Ireland ranges from 45 billion to 90 billion euros ($63-123 billion), depending on whether Dublin needs support for its banks.
Ireland and Greece says Germany has aggravated problems by pushing the idea of asset value reductions or "haircuts" for private bondholders under the planned permanent rescue mechanism, raising the spectre of potential defaults.
"Unless the EU changes track and agrees to make the EFSF (rescue fund) permanent and the ECB steps up its purchases of the hard-hit countries' government bonds, investors will believe that default is inevitable and demand correspondingly punitive interest rates," said Simon Tilford, chief economist at the London-based Centre for European Reform.
"Contagion to other member-states will be all but inevitable. If, and when, it reaches Spain, the crisis risks spiralling out of control," he said.
(Additional reporting by Terhi Kinnunen in Helsinki, Luke Baker and Julien Toyer in Brussels, William James in London; Editing by Paul Taylor and Mike Peacock)