Chief bank negotiator to meet Greek PM Thursday

Charles Dallara, head of the Institute of International Finance, was due to arrive in Athens on Wednesday and meet Papademos and Finance Minister Evangelos Venizelos on Thursday, one of the sources said.

Dallara's visit, announced by the IIF, was confirmed by government sources but not his agenda of meetings.

Venizelos later said that discussions with the private sector had "advanced and are now at a very good point. We are ready for a next meeting, maybe tomorrow morning, with our friend, Charles Dallara, from IIF".

"I would like to think that with the support of our institutional partners, this scheme will be completed and will confirm to the basic parameters and the keystone objective of the EU Council decision of October 26 for a sustainable public debt in the long run."

Greece and private investors, mostly banks, are -- according to EU officials -- near a deal on a debt writedown of at least 50 per cent in order to reduce the country's debt by 100 billion euros ($127 billion), a precondition for unlocking a second rescue agreed in principle at an EU summit last October.

"We are still holding to the goal of signing an framework agreement on debt reduction for the country before the troika of creditors arrives in Athens next week, but the ambiance is becoming feverish," said a source close to the negotiators.

Auditors for the so-called troika of European Union, International Monetary Fund and European Central Bank are due to begin another review of Greece's reform efforts on which disbursement of further funds under its 110-billion-euro rescue package from May 2010 depends.

The source said negotiations were now being held around the clock but that there was a growing sense of hostility towards a writedown deal from traders who had speculated on a Greek default.

"The hostility is not coming at all from the banks and institutions who are at the negotiating table, but the market operators who do not own Greek debt but who had bet on Greece and the eurozone collapsing," said the source.

Market operators who have invested massively on so-called credit default swaps that would pay off if Greece defaults on its debts or taken positions on the euro falling following a default, are getting angry as a deal appears increasingly likely, according to the source.

A writedown, which according to various sources is likely to reduce the value of privately-held Greek debt by over 50 per cent, should wipe some 100 billion euros off Greece's crushing sovereign debt of over 350 billion euros.

A deal should help Greece finalise with the eurozone a programme of 130 billion euros in new direct aid, of which 30 billion euros will be used to recapitalise Greek banks to cover their losses resulting from the bond writedown.

Greece needs to unlock rescue funds quickly as it must repay 14.43 billion euros in maturing debt on March 20.