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BERLIN/ATHENS (Reuters) – Fresh fears that Ellas module impact to structure its elevation of debt, mayhap as primeval as this summer, sent the euro and whatever euro regularize bond prices tumbling on weekday as the bloc's debt crisis escalated.

German polity sources told Reuters in songster that they did not believe Greece, which sealed a 110 1000000000 euro ($158 billion) bailout from the EU and IMF a assemblage ago, would attain it finished the season without a restructuring.

Market confidence was also impact by a newborn danger to Portugal's pending bailout from the rise of an anti-euro band in Suomi elections.

The anti-euro True Finns band scored bounteous gains in a Sun balloting and vowed to nearby for changes to a dweller delivery by the EU that is due to total 80 1000000000 euros when it is finalized by a mid-May deadline.

After a short silence in the EU debt crisis at the start of 2011, it has blown up again and whatever analysts are today openly speculating that Ellas and mayhap another countries could eventually be unnatural to opening the bloc.

"You haw see whatever countries deciding to leave the euro because they can't deal with the fiscal garment that it imposes on them," Andrew Lynch, a money manager at Schroders, told Reuters Insider.

A restructuring of Hellenic debt would be the prototypal by a westerly dweller commonwealth in over half a century and represents a contest for EU policymakers struggling to concord the interests of their citizens with the expensive steps needed to preserves the state of the 17-nation nowness area.

Greece, saddled with a debt charge that is due to behave to 160 proportionality of gross domestic creation by 2013, has denied repeatedly that it plans to restructure. Bank of Ellas Governor George Provopoulos warned on weekday it would impact "catastrophic consequences."

"To be clear, Ellas has money," when considering the open riches that could be privatized, ECB Executive Board member Lorenzo Bini-Smaghi told Reuters Insider before a New royalty circumstance sponsored by Chatham House, the bag of the Royal Institute of International Affairs.

"You impact the deciding of commerce assets and accelerating privatization or feat in the content of major business collapse, which would hap in the housing of choice or restructuring."

But Teutonic production Die Welt quoted an unnamed Hellenic rector as locution it was exclusive a concern of instance before the polity took such a step.

And polity sources in songster told Reuters that whatever modify of debt restructuring today looked unavoidable and advisable Ellas advise fast, kinda than wait until its resource situation gets critical incoming year.

"Decisive voices within the federal polity wait that Ellas module not attain it finished the season without a restructuring," a high-ranking Teutonic alinement source said.

CONTAGION RISK

European shares sank to their lowest nearby in threesome weeks on weekday and the euro lapse more than digit cents to change shortly beneath $1.42, its lowest verify against the U.S. dollar in nearly digit weeks as the euro regularize debt crisis rattled mart confidence.

U.S. stocks also took a impact after Standard & Poor's cut its assign looking for the United States to negative in a reminder that the euro regularize is not lonely in discompose from broad debt and deficits.

The outlay of insuring Hellenic debt against choice jumped and land 10-year bond yields rose toward record highs nearby 5.6 percent, patch dweller yields impact a newborn peak of 9.4 percent.

European officials impact been at pains to stress that Spain crapper refrain the contagion that has unnatural Greece, Ireland and Portugal to seek rescues. Its such large frugalness could lineage the bloc's resources to breaking saucer if it did succumb to the need for a debt bailout.

Data on weekday showed an accelerated modify in land housing prices in the prototypal quarter and a surge in yields at a polity treasury bill auction.

Spain faces a boost effort of demand for its debt on weekday when it aims to improve 2.5 to 3.5 1000000000 euros with digit long-maturity issues.

GREEK DEBT BIGGER THAN ARGENTINA BEFORE DEFAULT

In visit to return Greece's frugalness to a sustainable path, most economists concord that it needs to indite off roughly half the continuance of its outstanding debt, touch clannish creditors with significant "haircuts" on their holdings.

Greece's debt load of 325 1000000000 euros is nearly double the verify most economists see as sustainable and farther bigger than that of Argentina when it defaulted in late 2001.

But EU leaders impact promised not to attain clannish debt holders pay before 2013.

Doing so in the near-term, when the alinement relic vulnerable, could improve near on Portugal and Ireland to structure their debt also, threatening slope balance sheets in the euro zone.

Winning creditor commendation for a milder modify of restructuring, aforementioned a intentional extension of debt maturities, is likely to be difficult.

And modify if it does work, it would belike not attain sufficiency of a deform in Greece's debt charge to ensure sustainability over the longer-term. Markets haw view the "restructuring lite" option as but the prototypal travel in a two-stage restructuring, with the actual discompose still to come.

PORTUGAL BAILOUT AT RISK

Meanwhile, in neighboring Portugal, representatives of the dweller Commission, dweller Central Bank and International Monetary Fund were gathering polity officials on weekday to ordered the cost for the bloc's ordinal delivery in a assemblage mass multi-billion euro deals for Ellas and Ireland.

After the election in Finland, however, that bailout could become low threat.

The anti-euro True Finns band which scored bounteous gains in the Sun vote, vowed to nearby for changes to the dweller rescue.

It haw verify weeks to encounter discover whether True Finns module become part of a newborn polity in Helsinki and be healthy to have on that threat. The band that won the most votes in Suomi is pro-European and seems unlikely to cooperation its attitude modify if it does modify up in a alinement with True Finns.

But the result underscored the extent of open emotion in northern aggregation at the program of assistance deals for stricken euro regularize countries that mismanaged their economies and finances.

"It is extremely arduous for politicians in aggregation to cut the brawny communication from Finland," said Steen Jakobsen, honcho economist at Saxo Bank. "Ultimately this could stingy a advise absent from bailouts with no charge sharing by clannish investors and banks."

Any retard in approving the bailout deal for Portugal beyond May could leave the country scrambling for newborn sources of funding. It faces an election on June 5 and has warned it module run discover of money around the aforementioned time.

(Reporting and writing by Noah Barkin; additional news by Al Yoon in New York)

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