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EU Mulls 60-per-cent Greek Debt Cut as Merkel, Sarkozy Meet

Eurozone members were considering a possible Greek debt write-down of up to 60 per cent, German negotiators told dpa on Sunday, hours before German Chancellor Angela Merkel was due to meet French President Nicolas Sarkozy for talks in Berlin.
Sources close to the German government said it was too early to make a final decision on the extent of a Greek debt write-down, which would slash investors’ returns on Greek assets.
The sources said no decision would be taken until a report on the state of Greece’s finances by inspectors from the European Commission, the European Central Bank (ECB) and the International Monetary Fund had been completed.
Merkel and Sarkozy were due to meet at around 5:30 pm (1530 GMT), officially to discuss an upcoming European Union summit and a special meeting of eurozone leaders in Brussels. However, their talks were expected to be dominated by bank rescue plans, amid the ongoing eurozone debt crisis.
Sources close to Merkel rejected earlier reports that Germany was willing to grant French demands for greater flexibility in the funding of the European Financial Stability Facility (EFSF) bailout mechanism in return for a write-down of Greek debt.
Paris has so far rejected German demands for a haircut on Greek bonds, many of which are held by French banks. Berlin, for its part, has resisted French demands that the EFSF should be able to draw on ECB funds to refinance banks exposed to Greek debt.
Meanwhile, Greek media voiced concerns that Merkel and Sarkozy would agree to push for painful new measures to resolve Athens’ fiscal crisis.
(source: DPA)

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