UPDATE 2-Icesave vote set as Dutch say no new talks

* Iceland referendum set for March 6

* Dutch FinMin tells parliament no new talks on deal

* Says recognizes the situation, but nothing left to do

(Adds Iceland, Swedish PM comment, referendum date)

By Ben Berkowitz and Omar Valdimarsson

AMSTERDAM/REYKJAVIK, Jan 19 (Reuters) - Iceland set March 6 as the date for a referendum on passing a law seen key to restoring its financial health after the Dutch government squashed hopes of a new deal to repay the island's creditors.

Iceland owes Britain and the Netherlands more than $5 billion for losses related to the collapse of the North Atlantic island's banks in late 2008.

But earlier this month, its president refused to sign a law setting out repayment terms, forcing a referendum on the issue and putting on hold continued international aid for Iceland's stricken economy.

"A national referendum on the so-called Icesave legislation will be held on 6 March 2010," Iceland's Foreign Ministry said in a statement.

The ministry said Iceland has been in close contact with Britain, the Netherlands and the International Monetary Fund -- which is providing aid for the island -- and repeated it would honour its international obligations.

While it prepares for the referendum, the Icelandic government has been exploring with the opposition the chances of withdrawing the amended Icesave bill -- which has divided the country as well as souring Iceland's international relations.

That would mean a united position to take to the British and the Dutch.

But hopes of avoiding a vote were dealt a blow on Tuesday when Dutch Finance Minister Wouter Bos said the Netherlands had not received a formal request from Iceland to renegotiate and that it will not initiate such talks.

In a letter to the Dutch parliament, Bos said he understood the difficult situation in Iceland but that there was nothing to do but await a referendum.

BIND

Iceland is in a bind.

Opinion polls show the Icesave bill will be rejected in the referendum as voters believe they are being saddled with debts they are not responsible for and with repayments that will put the country into the poor-house.

Should the current Icesave bill fail in the referendum, an earlier law returns to force. Britain and the Netherlands have rejected that law because of limits it places on repayment.

Even if the government and opposition agree to withdraw the bill, they need to find a way to get Britain and the Netherland's back to the negotiating table.

Just how Iceland can do this is unclear as any new deal will be worse for the two European Union nations and better for Iceland.

Some have suggested that the way forward could be smoothed by the European Union or another party acting as mediator.

Swedish Prime Minister Fredrik Reinfeldt, seen as a possible candidate for such a role, said on Tuesday he had not been approached.

"We have not discussed that possibility, so I don't want to build up an expectations about that," he said.

In the letter, Dutch Finance Minister Bos said he was reassured by repeated comments by the Icelandic government that it would honour its obligations, regardless of the referendum's outcome.

But he also stressed what is at stake for Iceland, including international financial support to help it emerge from the credit crisis. The International Monetary Fund has suggested its hands might be tied by the debt dispute. [ID:nLDE60D1U6] (Reporting by Ben Berkowitz in Amsterdam and Omar Valdimarsson in Reykjavik; Editing by Angus MacSwan)