Germany's Finance Ministry said on Saturday it was not aware of any agreement by euro zone members to bail out heavily indebted Greece, and the European Union's executive said no such deal had been concluded.

The statements followed a report by Britain's Guardian newspaper that a multi-billion euro bailout for Greece had been agreed as part of a package to support the euro.

The paper quoted a senior European Commission official as saying the 16 euro zone members had agreed on coordinated bilateral contributions in the form of loans or loan guarantees if Athens was unable to refinance its debts and called on the EU for help.

Asked whether a deal had been concluded on financial support for Greece, European Commission spokesman Jonathan Todd said: The Commission stands ready to act if necessary. Technical work is ongoing and has not yet been concluded. All the rest is speculation.

A German ministry spokesman said he could not believe the newspaper report was correct.

We are not aware that this is being planned, he said, adding that Greece had not requested any aid. Greece is implementing its (savings) program and we expect that it will manage it alone.

The reports come ahead of a meeting of finance ministers on Monday, which officials have told Reuters would praise Greek austerity efforts and discuss a support mechanism that Athens could use to finance its borrowing needs if necessary.

Euro zone policymakers have been debating the issue of possible financial aid for Greece for more than a month, but have so far provided only words of support. Germany, key to any deal, has resisted appeals to promise aid.

The Guardian said agreement on a package had been reached despite strong resistance by Berlin. Berlin had played the pivotal role in organizing the deal, the paper quoted other sources as saying.

Euro zone finance ministers will finalize the package on Monday, the paper said.

The aid to be made available by the bailout could reach 25 billion euros, the paper quoted its sources as saying. Greece's borrowing needs for the whole of 2010 total 53.2 billion euros.


Greece, laboring under a crippling debt burden, announced a 4.8 billion euro package of austerity measures last week designed to reduce its budget deficit to 8.7 percent of GDP this year from 12.7 percent in 2009.

That has helped to ease markets' nerves and bring down the high premium over benchmark European bonds it has to pay to raise funds from a high of more than 400 basis points in January.

The bailout will be a coordinated approach of bilateral contributions ... a bilateral contribution can be a loan or a loan guarantee. The guarantees will facilitate the kind of funds potentially needed in this context, the Guardian quoted the senior Commission official as saying.

The agreement has been tailored to avoid breaking the ban in the rules governing the operation of the euro currency, on a bailout for a country on the brink of bankruptcy, and to avoid a challenge by Germany's supreme court, the official said.

The Commission is also rushing through tougher rules for the euro zone to set up rigorous budgetary surveillance of the 16 member states, the Guardian said. Greece has in the past provided the European Union with misleading economic statistics.

The Greek case is a turning point for the euro zone, the Guardian also quoted EU Economic and Monetary Affairs Commissioner Olli Rehn as saying in an interview with it and other European papers.

If Greece fails and we fail, this will do serious and maybe permanent damage to the credibility of the European Union. The euro is not only a monetary arrangement but a core political project of the European Union ... in that sense we are at a crossroads.

Rehn said he would propose next month a regime of rigorous surveillance of national budgets including giving Eurostat, the EU statistics agency, big new auditing powers over the accounts of euro zone member states.

(Reporting by Tim Pearce in London, Pete Harrison in Brussels and Volker Warkentin in Berlin, Writing by Sarah Marsh; Editing by Patrick Graham)