UPDATE 1-Greece should get EU support for pledges-Almunia

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By Marcin Grajewski and Jan Strupczewski

BRUSSELS Feb 9 (Reuters) - European Union leaders should tell Greece on Thursday that it will receive the bloc's support in exchange for clear budget commitments, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said on Tuesday.

EU leaders meet on Thursday in Brussels and are likely to discuss the difficult budgetary situation of Greece amid growing market concern that Athens may not be able to service its debts.

Euro zone and Greek assets recovered some poise on Tuesday as markets bet the European Union was on the verge of taking steps to restore confidence in struggling members like Greece.

Almunia's words were the nearest Brussels' policymakers have gone to suggesting the bloc could actively support Athens.

"I would like the leaders of Europe to say to the Greek authorities that in exchange for the efforts you are making, you are going to get support from us," Almunia told the European Parliament on what was his last day in office.

"You don't get support for free. That would simply lay the foundations for further imbalances and crisis. We have got instruments to provide that in exchange for clear commitments that they will meet their responsibilities," Almunia said.

Greece has pledged to reduce its budget deficit to below 3 percent in 2012 from 12.7 percent in 2009 after ratings downgrades which pushed Greek yields to record highs.

"What I would like to see this (European) Council producing is a clear demand on all member states, starting with Greece, that they meeting their obligations and put into practice those measures they committed themselves to carrying out," Almunia said in the French city of Strasbourg.

Almunia warned that Greek problems were a common concern for the euro zone. Spain and Portugal, which also have large deficits and face popular opposition to cost cutting, have also seen their yields rise in a spill-over effect of market worries.

"The difficult situation in Greece is a matter of common concern for the euro area ... There is serious risk of spill over to other parts of the euro area," Almunia said.

He said the executive European Commission fully supported Greece's fiscal cuts programme, but noted the plan carried risks, such as worse economic growth than expected or insufficient tax revenues.

Greece must therefore be ready for additional fiscal cuts.

"There are risks to the programme targets ... the macroeconomic scenario is rather optimistic," he said.

He said that to regain economic competitiveness, Greece must pass an ambitious package of structural reforms including those on the pension and health care systems, and make its labour market more flexible. (Reporting by Marcin Grajewsk and Jan Strupczewski, editing by Dale Hudson)