* Merkel: can't decide on new Greek aid before EU/IMF report
* Greece denies report it expects 60 bln euro package soon
* Euro zone source says no figure under discussion yet
By Ingrid Melander and Stephen Brown
ATHENS/BERLIN, May 10 (Reuters) - German Chancellor Angela Merkel, Europe's reluctant paymaster, said on Tuesday she could only discuss further aid for Greece after EU and IMF officials report on implementation of its existing rescue plan.
Speaking to foreign correspondents in Berlin, Merkel did not rule out additional funding for Athens, or a possible fresh easing of the terms on its 110 billion euro ($157 billion) bailout, and she voiced confidence that the German parliament would back a permanent bailout mechanism for the euro zone.
"I need to analyse the findings of the European Central Bank, European Commission and International Monetary Fund first and I can't comment before that," she said. "Anything else would not help Greece or Europe."
A source with direct knowledge of the joint inspection mission visiting Athens said EU and IMF officials had not yet concluded whether Greece had met targets required to receive the next tranche of aid under its existing aid deal.
He stressed the inspectors were not discussing any new bailout package with Greek authorities.
A senior German lawmaker said earlier there were signs that conditions for the next payment had not been met.
Euro zone markets steadied amid growing expectations that Greece may receive a new aid package to cope with its debt crisis and avert an early restructuring that could force investors to take crippling losses.
But Greek and EU officials dismissed a Dow Jones report that Athens was expecting a 60 billion euro ($86 billion) second bailout next month as plain wrong, or at least highly premature, insisting talks on further assistance were only at an exploratory stage.
Analysts said the projected figure of 60 billion euros was merely a reflection of the amount Athens is due to raise on markets in 2012 and 2013 under its current programme.
EURO, SHARES STEADY
The euro, which hit a three-week low against the dollar on Monday after ratings agency S&P downgraded Greece deeper into junk territory and said it might have to write off up to 70 percent of its debt, regained some ground on Tuesday.
European shares crept up partly due to a growing belief that the European Union would act to support Athens and prevent forced write-downs on its 327 billion euro debt mountain. The cost of insuring Greek and other peripheral euro zone debt against default fell slightly.
"There is no formal negotiation between Greece and the European authorities on any new package," a senior euro zone source in Brussels told Reuters.
Euro zone finance ministers would take a first look at the situation next Monday when they receive the conclusions of the EU/IMF/ECB mission, he said.
Austrian Finance Minister Maria Fekter was quoted as saying Greece might be given longer to repay 110 billion euros in emergency loans under its existing EU/IMF rescue plan, and the interest rate could be cut again.
"International aid is clearly tied to reform measures," the Austrian Press Agency quoted her as saying.
APA said Fekter expressed "total rejection" of any rescheduling of Greek sovereign debt, saying: "That brings absolutely nothing. There would be no pressure for reforms."
Greece paid an increased yield of 4.88 percent to sell six-month treasury bills on Tuesday to refinance maturing debt, higher than last month and well above the 4.2 percent average rate on its IMF and EU loans.
"POLITICAL SUICIDE"
Finance Minister George Papaconstantinou has acknowledged that investors do not believe Athens will be able to return to capital markets next year to raise 27 billion euros as foreseen under its bailout plan.
The chairman of euro zone finance ministers, Jean-Claude Juncker, said after senior euro zone policymakers met last Friday there was a consensus that Greece would need a second adjustment programme.
Despite widespread market expectations that Greece will eventually have to restructure its debt, ECB policymakers kept up a barrage of dire warnings against such a move.
ECB governing council member Ewald Nowotny of Austria said Greece should be given more time to repay financial aid rather than issuing new loans.
A restructuring "would immediately have massive consequences for the Greek Banking system and for the banking system overall," he told Austrian radio. "That would only heighten the crisis."
ECB executive board member Lorenzo Bini Smaghi said a euro zone debt default or restructuring would be "political suicide".
Speaking in Florence, Bini Smaghi said Greece was a rich country with assets it could sell to pay down its debt. Asked about a possible new aid programme for Athens, he said it should follow its reform programme for the coming months to try to restore market confidence. (Additional reporting by Julien Toyer in Brussels, George Georgiopoulos in Athens, Kirsten Donovan in London; writing by Paul Taylor, editing by Mike Peacock)