WRAPUP 4-Iceland slashes rates, Russia studies loan request

(Adds loan talks with Russia end)

By Patrick Lannin and Omar Valdimarsson

REYKJAVIK, Oct 15 (Reuters) - Iceland acted to shore up its ravaged economy by slashing borrowing costs on Wednesday and its officials pursued efforts with Russia to get a multi-billion euro loan to help it over the worst financial crisis in its history.

The second round of talks in Moscow ended with Russia agreeing to consider the request for a loan which the North Atlantic island initially put at 4 billion euros ($5.45 billion). No date was set for a new round of discussions.

"The meeting took place in a friendly atmosphere ... We are working thoroughly on the issue to take a final decision", Russian Deputy Finance Minister Dmitry Pankin said in a statement after talks ended.

Russian officials say no details have been agreed, although they are looking on the loan request favourably.

Earlier, in Reykjavik, the central bank cut its main interest rate to 12 percent from 15.5 percent, hours before Prime Minister Geir Haarde was due to address parliament on how the government is coping with a crisis that has brought down the banking system and made the local currency untradeable.

Belgium meanwhile offered a lifeline to Iceland's biggest bank, Kaupthing Bank, and was sending Prime Minister Yves Leterme to visit Iceland on Friday to meet Haarde.

Belgian Finance Minister Didier Reynders told reporters that his government was ready to help rescue Kaupthing, where thousands of Belgians have savings which they are now fearful for.

"We are trying to see how we can help through an intervention of the IMF (International Monetary Fund)," Reynders said on arrival at a European Union summit in Brussels.

Iceland is due to present a plan to the Washington-based IMF in the coming days and is widely expected to seek funds.

The crisis has brought the Washington-based lender sharply into focus again as vulnerable countries turn to it for help. An IMF team was on its way to Ukraine, whose central bank said the country may draw on standby support from the fund.

Iceland's crisis, however, is somewhat unique. The north Atlantic economy of some 300,000 people is highly developed and years of rapid growth have brought it unprecedented prosperity.

Icelandic banks in recent years embarked on a campaign of unbridled expansion, building up operations overseas but taking on huge debts. When global credit markets froze, the banks found themselves unable to meet obligations.

Now, with the economy reeling, people are confused.

"You do not know what is happening, you do not feel informed. Will the IMF come and take control?" said Arni Gudmundsson, a 29-year-old man who described himself as self-employed.