Greece awaits rescue package, protesters decry cuts

ATHENS (Reuters) - Greece hopes to secure a deal with the European Union and the IMF for a multi-billion euro financial bailout to be announced on Sunday, a day after thousands protested in Athens against planned state cutbacks.

Greek Prime Minister George Papandreou is to hold a televised cabinet meeting at 6:30 a.m. GMT (2:30 a.m. EDT) which is expected to confirm a deal has been reached, a government official said on Saturday.

The EU plans to give its go-ahead to the aid -- which will come in return for tough austerity measures in Greece -- at a meeting of euro zone finance ministers at 2 p.m. GMT (8 a.m. EDT) in Brussels.

Greece and its international backers hope the deal, which could reach up to 120 billion euros ($159.8 billion), will help stem a crisis that has hit the euro and shaken markets worldwide.

Greek, European and IMF officials remained tight-lipped late on Saturday and declined to say whether a deal on the terms of the package had been reached in talks in Athens.

The Greek government official had said earlier in the day that the debt-choked country expected the talks to be concluded some time on Saturday, adding that the Sunday morning cabinet meeting was meant to confirm the deal.

"The cabinet meeting will confirm the deal and after that the Finance Minister (George Papaconstantinou) will announce the deal in a press conference. He will then fly to participate in the Eurogroup," the government official had told Reuters, referring to the Brussels meeting.

All other steps taken so far by Greece and the EU have failed to calm months of market jitters that have brought the country's borrowing costs to record highs and also affected other peripheral euro zone countries.

MAY DAY PROTEST

Analysts say whatever ultimately happens in the Greek debt crisis, investors are having to come to grips with an unstable euro zone.

French Economy Minister Christine Lagarde said on Saturday she expected a package of 100-120 billion euros ($133-$160 billion) to help Greece out of its debt crisis, and had "good hopes" a deal could be reached by the end of this weekend.

A bailout will come in return for draconian budget cuts in Greece, where thousands marched on May Day shouting slogans against austerity measures they say only hurt the poor and will drag the country further into recession.

"No to the IMF's junta!," protesters chanted, referring to the military dictatorship which ruled Greece from 1967 to 1974. "Hands off our rights! IMF and EU Commission out!," the protesters shouted as they marched to parliament.

More than half of Greeks say they will take to the streets if the government agrees to new austerity measures, according to an ALCO poll released on Friday by the newspaper Proto Thema.

European banks will contribute to Greece's bailout, Germany said on Friday, and that could make it easier for EU governments to persuade taxpayers to rescue Greece from its debt crisis.

If euro states fail to engineer a Greek bailout that calms markets, they could end up footing a bill of half a trillion euros ($650 billion) to save several nations, economists say.

Markets have worried that countries such as Portugal and Spain, whose debt was downgraded by ratings agencies this week, could be threatened unless they tackle their deficits swiftly.

The IMF believes it will take 10 years for Greece to overcome its financial problems, according to a report to appear in Monday's Der Spiegel magazine.

(Additional reporting by Lefteris Papadimas; Editing by Charles Dick)