Merkel and Sarkozy set for Greece deal: German official

BERLIN Fri Jun 17, 2011 3:10am EDT

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BERLIN (Reuters) - Germany and France will likely reach a compromise on Friday on involving private creditors in the funding of a second bailout for Greece, German Deputy Foreign Minister Werner Hoyer said.

German Chancellor Angela Merkel will meet with French President Nicolas Sarkozy on Friday morning to discuss the details of a new Greek aid package. They are due to hold a joint news conference at 1145 a.m. (5:45 a.m. EDT).

"I believe the meeting today will yield a solution," Hoyer told German public TV station ZDF. "I am sure that they will come to a compromise."

Asked what the compromise could consist of, Hoyer said he did not know but was confident that it would be reached.

Hoyer, a member of the Free Democrats (FDP) who are junior coalition partners to Merkel's conservatives, is not directly involved in the talks but has responsibility for coordinating French-German relations in the foreign ministry.

European paymaster Germany called earlier this month for Greece's private creditors to swap their bonds for new ones with maturities that are seven years longer, but has encountered fierce resistance to those plans from France, the European Central Bank and European Commission.

Berlin's partners are pushing for a softer option in which holders of Greek bonds would be asked to buy new Greek debt as their existing holdings mature.

Berlin is now trying to buy time for a compromise, sources say, and suggested on Thursday that a final deal may not be sealed before September.

(Reporting by Annika Breidthardt; editing by Patrick Graham)

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