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ATHENS/LISBON (Reuters) – Ellas neared a care with the EU and IMF to avert a near-term default, actuation the euro to a one-month high on Wednesday, but a poor debt auction in Portugal and stalled land remuneration talks highlighted the risks of contagion.

Sources near to talks between Athinai and inspectors from the dweller Commission, dweller Central Bank and International Monetary Fund (IMF), said they cod the stylish review of Greece's fiscal progress to be complete by Friday.

One Hellenic authorised participating in the discussions spoken optimism that the so-called "troika" would release the 12 1000000000 euro tranche Ellas needs to counterbalance its short-term resource needs.

"There module be a artefact for the disbursement of the ordinal broadcast to be approved," the authorised told Reuters, requesting anonymity. "The negotiations with the troika module be over today or tomorrow, the stylish by Friday."

The Teutonic direction ministry played downbound concerns that the IMF strength balk at emotional its care of the assistance and leave aggregation scrambling to make up the difference.

IMF officials had warned over the time hebdomad that they would not pay up unless Greece's 2012 resource notch was addressed, forcing euro regularize governments to become up with a broader finance plan.

"Everyone seems to be converging slowly but sure toward a consensus which is probable to refer a mix of added aid, more austerity and whatever clannish facet involvement," said Gilles Moec, an economist at Deutsche Bank in London.

The calming signals helped the euro near up to a four-week peak against the dollar, which was further undermined by anaemic U.S. jobs data.

PORTUGAL COSTS SPIKE

In a reminder of the current challenges visaged by the 17-nation nowness bloc roughly 1-1/2 eld after its debt crisis erupted, Portugal saw its short-term adoption costs fruit higher in a calculate auction and accumulation showed manufacturing weakness in the so-called euro regularize periphery.

The country, which united to a 78 1000000000 euro EU/IMF bailout terminal period and conventional its first tranche on Wednesday, oversubscribed 850 million euros in four-month T-bills at an cipher consent of 4.967 percent, more than 30 foundation points above what it paying for three-month paper inferior than a period ago.

Elisabeth Afseth, a immobile income shrink at Evolution securities, said the sale showed there was "still a lot of nervousness in the mart and fears that there module be incident from the Ellas situation to island and Portugal."

In neighboring Spain, Economy Minister Elena Salgado conceded that talks between unions and employers on reforming agglomerated remuneration bargaining were stalling.

A reform of rules governance remuneration agreements would be digit artefact to reassure markets and Spain's peers that it is earnest most boosting fecundity levels that are among the lowest in the euro zone. The polity has warned it module near finished the reforms unilaterally by June 10 if no care is doable by then.

Ireland, the another land alongside Ellas and Portugal to obtain a bailout, conventional whatever beatific programme long when Standard & Poor's said it believed the land had a beatific quantity of backward to the top markets incoming assemblage to raise long-term funding.

PRIVATE SECTOR PLAN

But Ellas relic a field vexation and even a care to flow it over finished the end of 2013 is unlikely to assuage concerns that it module eventually be forced into a coercive restructuring of its debt, which stood at nearly 330 1000000000 euros -- or near to 150 proportionality of value -- at the end of terminal year.

A harsh restructuring that would obligate losses on clannish creditors has been ruled out for now, but FRG and allies like Finland and the Netherlands are demand on whatever variety of signaling status from the clannish sector.

Sources hit told Reuters for the time digit weeks that investors who stop Hellenic bonds that are cod to mature in 2012 and 2013 module be pleased to listing over that debt low a plot kindred to the "Vienna Initiative" utilised in primeval 2009 to measure banking systems in bicentric and eastern Europe.

It is blurred what incentives governments could substance to persuade investors to buy newborn Hellenic bonds, but in kindred cases in the past, they hit been promised higher coupons, desirable creditor status or collateral as inducements.

In constituent to the clannish facet role, a newborn collection for Ellas -- cod to amount around 65 1000000000 euros according to EU officials -- could refer a mixture of collateralized loans from the EU and IMF, as well as more revenue measures.

Athens could also become low push to accept unprecedented invasive outside supervision of its privatization program, which has still to delude anything since the 110 1000000000 euro EU/IMF delivery digit assemblage ago.

"We necessary the extra commitments from the Greeks to get this done," said Moec of Deutsche Bank. "There is still uncertainty most whether the contestant module accept every of this, but the polity seems to be making every the efforts it can."

While commendation of the stylish assistance tranche could become soon, haggling over the appearance of a second bailout collection is cod to move over the reaching weeks, culminating in a summit of EU leaders in Brussels on June 24.

(Additional reporting by Brian Rohan in Berlin, Elisabeth O'Leary and Apostle Day in Madrid, writing by Noah Barkin, redaction by Mike Peacock)

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