UPDATE 1-Finnish PM says ready to support Cyprus, challenges are huge

Fri Jan 11, 2013 8:18am EST

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LIMASSOL Cyprus Jan 11 (Reuters) - Finland's Prime Minister Jyrki Katainen said his country is ready to support Cyprus in its attempts to secure a bailout but the island's government needs to show stronger leadership to meet "huge challenges".

"The challenges are really huge, but I'm sure if and when the country can get a new and strong and committed leadership capable of strengthening confidence it will have a tremendous positive impact," he told reporters on Friday at a meeting of European centre-right parties meeting in Limassol, Cyprus.

His comments were a clear signal of support for Cypriot opposition leader Nicos Anastasiades, tipped to win Cyprus's presidential election on Feb 17. Anastasiades was hosting the meeting of the European People's Party (EPP).

Cyprus applied for a financial bailout from its EU partners and the IMF last June after its banks reported massive losses to debt-wracked Greece.

Talks are complicated by concerns over the scale of the bailout which could reach the size of the island's entire 17.5 billion euro economy. Authorities have already pledged 1.2 billion euros in savings as part of a draft bailout deal over a four-year period.

"The medicine may be bad tasting but sometimes things like this happen," Katainen said.

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