EU backs Greek austerity as standby aid readied

"It will be decided by the European Council (of EU leaders) when the time comes, if and when Greece were to ask," Spanish Economy Minister Elena Salgado told a news conference at the end of two days of talks in Brussels.

Ministers from the 16-country euro zone said late on Monday they had agreed the "technical modalities" that would permit aid to be rapidly rolled out but gave no figures and few details of a plan likely to involve bilateral loans.

They reconvened on Tuesday with the other finance ministers from the 27-country EU, where Germany, Spain and others reiterated that Greece needed no help for now.

European Commissioner Olli Rehn said the Greek government's plans to slash the country's public deficit by a third this year were "realistic" and took account of recently downgraded forecasts of a 2 percent economic contraction this year.

Initial financial market reaction was muted, with no drastic change in the euro exchange rate or bond yields, both of which have been buffeted by fears for Greece's ability to honour its debts and what this would mean for the wider monetary union.

German Finance Minister Wolfgang Schaeuble, who left Brussels early, told the German parliament there was increasing cause for concern that speculators were targeting currencies and the competitiveness of all EU states must be strengthened.

Ministers refrained from saying when a final aid move for Greece might come. A German government spokesman said Berlin did not expect any decision to be taken at an EU summit next week.

Germany, Europe's biggest economy and the country that would be the linchpin of any support, is reluctant to bail out Greece and above all to rush into anything before Athens shows it is willing to take the painful steps needed to fix its finances.

GREECE COULD GET BILATERAL AID