Iceland says gets UK assurance on EU bid

STOCKHOLM Jan 7 (Reuters) - Iceland's foreign minister said on Thursday he had been assured by British Foreign Secretary David Miliband that a presidential rejection of the so-called Icesave bill would not torpedo Iceland's EU bid.

Iceland's president refusal to sign a bill to repay Britain and the Netherlands more than $5 billion their savers lost when Icelandic banks collapsed, forces a referendum on the issue and threatens vital economic aid as well as Iceland's application to join the European Union.

"I have spoken to Foreign Secretary Miliband and I have his permission to state officially that this will not affect the EU application," Icelandic Foreign Minister Ossur Skarphedinsson told Reuters in a telephone interview.

The minister said the coalition government was making every effort to limit any potential fallout of the President Olafur Grimsson's move and stressed Iceland's need for support from its Nordic neighbours, who are contributing money under the International Monetary Fund's aid programme for the island nation. "I stress that if the Nordic countries were not to stand by us, it would be a terrible blow for us and it would be out of harmony of what their leaders have said and with our long-standing relations," he said.

"I mean, these are our kinsfolk."

(Reporting by Niklas Pollard)