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France's Sarkozy to meet Greek prime minister for talks on resolving debt crisis
PARIS (AP) ' France's president will discuss Europe's tortured attempts to prop up debt-choked Greece when he meets the country's Prime Minister George Papandreou at the Elysee Palace later Friday.
Investors are convinced Greece's latest bailout needs to be changed ' mainly by imposing bigger losses on Greece's private bondholders, among which are large French banks ' and will look for any indication Nicolas Sarkozy is open to the idea.
France has so far insisted Greece's second bailout package should not be altered, though German Chancellor Angela Merkel said this week she was open to a renegotiation of its terms.
Sarkozy has striven to show a unified position with Merkel, but financial markets were spooked this week by signs of a widening disagreement between the eurozone's two largest members. Stocks were down again on Friday, ending on a downbeat note the third quarter, which has seen the sharpest market losses since 2008.
Greece was saved from default by an initial euro110 billion ($150 billion) bailout in May last year. A planned second euro109 billion rescue package for Greece this year includes a voluntary participation by private bondholders, who agreed to write off about 20 percent on their Greek debt holdings.
Many experts say those writedowns should be closer to 50 percent. The debate among European leaders now is whether to allow such a move under controlled conditions, providing help to banks that may take heavy losses on Greek bonds they hold.
Papandreou is on a European tour, having met with Merkel on Tuesday, to drum up support for Greece. He has stressed the importance of the EU's July 21 agreement, under which Greece was granted its second bailout, and insists Greece will meet its debt and deficit targets.
The July deal has yet to be ratified, and is still making its way through the eurozone's 17 capitals.
Part of the July deal was to expand the size and powers of Europe's rescue fund, the European Financial Stability Facility. German, Cypriot and Austrian lawmakers were the latest to approve the measure. France approved the deal earlier this month.
On Thursday, officials from the International Monetary Fund, European Central Bank and European Commission ' known as the troika ' resumed their review of reforms Greece must make to qualify for its latest installment of bailout loans.
Greece has been reliant since May last year on regular payouts of loans from the euro110 billion bailout from other eurozone countries and the IMF.
The troika had originally been expected to approve Greece's next batch of loans, worth euro8 billion, in early September. Greece has said that without the loans, it has enough funds to see it through mid-October, after which it runs out of cash and will be unable to pay salaries and pensions.
The slow pace of progress in the debt crisis has caused markets to fall sharply over the past months and fueled calls for an overhaul of the economic governance of the euro.
The head of the EU's executive, Jose Manuel Barroso, said day-to-day decision-making needed to be centralized in European bureaucracies, above sovereign nations.
France and Germany, which represent about half of the bloc's output, have proposed holding two annual summits where eurozone governments would focus on economic policy.
While Barroso said he supports the idea of such meetings, he told the Friday edition of German daily Sueddeutsche Zeitung that the "micro-management" of European economic policy needed to be done through centralized institutions, according to a translation provided by his office.
Baetz reported from Berlin.
Greg Keller can be reached at http://www.twitter.com/Greg_Keller