Greek austerity talks to continue, progress seen

Greece will continue talks with international lenders next week on new austerity measures for the debt-ridden country to clinch its next loan tranche, the finance minister said on Saturday, with both sides saying progress had been made.

Negotiators had been pushing for a deal before a meeting of euro zone finance ministers on Monday, but Greece said it would settle for a statement acknowledging that talks were advancing.

"We will continue next week as well," Finance Minister Yannis Stournaras told reporters following talks in Athens with Greece's troika of creditors - the European Union, European Central Bank and International Monetary Fund.

"We hope there will be a positive presentation from the troika, the IMF, EU and ECB, at the eurogroup," he said. "We're trying to reach a compromise that will be in the interests of the economy and the poor."

Five consecutive years of recession have driven unemployment to record levels, gutted household incomes and led to repeated bouts of protest and unrest on the streets of the Greek capital.

New protests are expected on Tuesday when German Chancellor Angela Merkel will make her first visit to Greece since the euro zone debt crisis erupted in late 2009.

The trip represents a show of support for the government of conservative Prime Minister Antonis Samaras and an apparent signal of the determination of Europe's most powerful leader to keep Greece within the euro.

Earlier on Saturday, a senior Greek government official said the sides needed another two weeks to agree a pact on almost 12 billion euros of new savings to secure the next tranche of some 31.5 billion euros ($41.14 billion) in urgently needed loans.

Without it, Greece says it will run out of money at the end of November.

The official said there had been "convergence" in the talks and that a positive statement from euro zone finance ministers on Monday would mark a "signal for talks to continue ... next week and the week after that".

The cuts are necessary to keep the Greek budget within the targets set by the EU and IMF under the terms of the latest multi-billion-euro bailout staving off bankruptcy and a messy exit from the single European currency.

Greek sources say the talks are stuck on some 1.2-1.5 billion euros of savings, with the government - an uneasy alliance of conservatives and socialists - trying to avoid even deeper cuts to public sector wages and pensions.

The IMF sounded an upbeat note.

Fund chief Christine Lagarde told a news conference in Riyadh on Saturday that talks on one element of the Greek program, the fiscal chapter, had been "very good and productive". The talks also cover structural reforms, financing and debt sustainability.

EU Commissioner for Monetary Affairs Olli Rehn said negotiations had "moved on" and that agreement was possible in the coming days.

($1 = 0.7657 euros)

(Writing by Matt Robinson; Editing by Alison Williams)