LONDON (MNI) – Trying to find a consensus on how to involve the
private sector in Greece’s second bailout will be the ‘main focus’ of a
working lunch in Brussels today attended by top EU and ECB officials,
according to an EU source.

The official said that recent market developments, such as the
widening of Italian bond spreads, would not be the main issue at today’s
talks but added that it would be a ‘bit ridiculous’ if the Italian
situation were not to come up at the meeting.

EU President Herman Van Rompuy, Eurogroup President Jean-Claude
Juncker, European Central Bank President Jean-Claude Trichet, European
Commission President Jose Manuel Barroso and European Economic and
Monetary Affairs Commissioner Olli Rehn will meet over a ‘working lunch
today’.

The meeting of these top officials is aimed at coordinating their
message on key issues ahead of a Eurogroup meeting later this afternoon,
scheduled to begin around 1300 GMT.

Earlier today, Van Rompuy declared that the lunch was not in any
way a ‘crisis meeting,’ while Barroso stressed earlier that the meeting
was “not to discuss…Italy, but only…Greece.”

The Eurogroup meeting, which will include the finance ministers of
the Eurozone countries as well as Juncker, Trichet and Rehn, is intended
to make progress on the issue of a private sector “bail-in” for a second
Greek aid plan that could exceed E100 billion.

The talks follow reports that negotiations with the banks on how to
arrange a Greek bail-in for private sector creditors have failed to make
much headway. EMU nations are divided among themselves as well as with
the ECB on the issue of private sector contributions to a new Greece
rescue package.

The leaders’ inability to agree on a solution is one of the key
factors behind the widening of spreads on Italian and Spanish bonds in
recent days, as contagion fears rise. Italian 10-years spreads now stand
at 265 basis points over German Bunds, while Spain’s are over 300 basis
points above Bunds. Also weighing on Italian bonds are fears about the
domestic political situation following an unusual public spat last week
between Italy’s Prime Minister Silvio Berlusconi and his Finance
Minister Giulio Tremonti.

–London newsroom: 0044 20 7862 7492; email: ukeditorial@marketnews.com

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