The international bailout of Greece is likely to total up to 120 billion euros, a German lawmaker said on Wednesday after International Monetary Fund chief Dominique Strauss-Kahn held talks in Berlin.

Germany has been reluctant to help debt-riddled Greece and Strauss-Kahn said it was too soon to give details as the rescue package was not yet finalized.

But markets rebounded on Wednesday on expectations that the aid will be much bigger than originally envisaged.

The euro lifted off a one-year low against the dollar which it hit earlier on Wednesday, and was up 0.4 percent on the day at $1.3212. The Greek/German 10-year government bond yield spread was at 792 basis points, off an earlier record above 1,000 basis points.

If all this goes together rapidly, I'm really confident that the problem will be fixed. But if we don't fix it in Greece it may have a lot of consequences on the rest of the European Union, Strauss-Kahn said after he and European Central Bank president Jean-Claude Trichet met the parliamentarians.

Financial markets have fallen precipitously this week on fears of a Greek default and a possible domino-effect through fringe EU states, and some investors have questioned whether the euro currency zone can survive the billowing crisis.

One German lawmaker quoted Strauss-Kahn as saying the eventual package for Greece would be worth 100-120 billion euros ($133-160 billion) over three years, against just 45 billion pledged for this year by the IMF and euro zone governments.

Strauss-Kahn declined to comment on the figure.

Germany in particular has been dragging its feet over moves to help Greece, which had misled Europe about the dire state of its finances, and it was not immediately clear how European governments would raise additional money for Athens, or whether they could secure public support for the move.

Juergen Trittin, a parliamentary leader for the Greens, said Strauss-Kahn had also told German lawmakers that Greece should be taken off the market de facto for three years, giving it time to cut its deficit, which hit 13.6 percent of GDP in 2009.

Underlining market concerns of a possible default, CMA Datavision said on Wednesday that the cost of insuring Greek debt rose on Wednesday above Venezuela's -- previously the highest of the 70 sovereigns tracked by CMA.

Chancellor Angela Merkel's party risks defeat in a regional election on May 9 and has faced fierce pressure to cast Greece adrift, despite warnings that could lead to market mayhem.

But German Finance Minister Wolfgang Schaeuble said Berlin would move rapidly as soon as ongoing talks between Greece, the IMF, EU and ECB on the terms of a rescue were agreed.

The stability of the euro is the question, the last resort question. We're seeking backing in the parliamentary groups to for a speedy process, by Friday. And then we'll pass a corresponding law next Monday, he told a news conference.


European Commission officials dismissed any talk of a restructuring of Greece's debt mountain, which totaled 115 percent of gross domestic product last year and is projected to push even higher as Athens struggles to tame its huge deficit.

EU leaders also rushed to the barricades, promising to protect Greece and dismissing talk that other countries, such as Portugal, could be sucked into the debt vortex.

The European Union, the euro zone states are going to assume their full responsibility regarding Greece, French Prime Minister Francois Fillon told the French parliament, dismissing concerns that Germany did not want to help Athens.

What might seem as hesitation on the part of the German government will vanish today, he added.

Rating agency Standard and Poor's slashed Greek debt to junk status on Tuesday and also downgraded Portugal, raising concerns the crisis may engulf other heavily indebted EU states.

European Central Bank Executive Board member Juergen Stark said EU governments must move rapidly to put their finances in order, adding that current fiscal policies were not sustainable.

The onus is now on governments to ensure that the crisis that initially affected the financial sector, and subsequently the real economy, does not lead to a full-blown sovereign debt crisis, Stark said.

Averting it will require very ambitious and credible fiscal consolidation efforts. In fact, substantially stronger consolidation efforts than those conceived so far.

European Union President Herman Van Rompuy said he would convene a summit of euro zone countries around May 10 and insisted there would be no Greek default.

A Reuters poll on Wednesday showed that financial analysts saw a roughly one in three chance of Greece restructuring its debt some time in the next five years, and an approximately one in 10 chance of it leaving the euro zone.

Greece's securities regulator banned short-selling in shares on the Athens bourse until June 28 after investors responding to the deepening debt crisis ditched Greek assets.

S&P cut its rating of Greek government debt by a full three notches to BB-plus, the first level of speculative status. The outlook is negative, meaning it could cut the rating again.

The downgrade put Greece below Kazakhstan, Hungary and Iceland, the last of which rocked global markets when its main banks imploded at the start of the global financial crisis.

In Athens on Tuesday, about 1,500 private and public sector workers, students and anarchists marched to parliament chanting Out with the IMF and the European Union in protest against austerity measures that could accompany the bailout.

Some 60.9 percent of Greeks disapprove of their government's decision to ask for financial aid, according to an opinion poll released by Greek Public Opinion for Mega TV.

(Writing by Crispian Balmer; editing by Dominic Evans)

($1=.7508 Euro)