EU backs Greek austerity as standby aid readied

"But we do need some form of instrument, which, if necessary, can intervene in the market and make sure that we borrow at rates which are similar to the rates of other countries in the euro zone and which are not too expensive."

EU LEADERS TO HAVE LAST WORD

Belgian Finance Minister Didier Reynders suggested aid options were far from set in stone. The European Commission said the EU executive was ready to propose an aid framework, positioning itself as a possible conduit through which bilateral aid lines would be funnelled or coordinated.

Italian finance minister Guilio Tremonti was non-committal on Italy's contribution, saying the matter was for leaders to decide if it came to that.

Economists said the announcements were a step in the right direction even if the situation remained fuzzy.

"There is still much uncertainty over exactly how the package would work, not least over what would actually trigger it," said Ben May, analyst at Capital Economics, a consultancy.

Goldman Sachs economist Erik Nielsen said Greece would need to raise another 8-10 billion euros on markets before mid-May and that this could be the trigger point if the refinancing proved too stressful.

"If this is not feasible at an acceptable cost, then help will be provided," he said.

Dutch Finance Minister Jan Kees De Jager said any help would be tied to tough conditions of the kind that the International Monetary Fund applies when rescuing countries in trouble.

Italy's Tremonti is keen to keep his country's high debt under control too and suggested to reporters that the IMF not be ruled out as a source of help for Greece. (With reporting by Marcin Grajewski, Brian Rohan, Tamora Vidaillet and Francesca Landini; Writing by Brian Love; Editing by Dale Hudson)