EU finance ministers on Tuesday discussed standby plans drawn up by countries using the euro to provide Greece with financial help if it becomes the first state in 11 years of monetary union to seek such aid.

Ministers from the 16-country euro zone announced late on Monday they had agreed the technical modalities that would permit aid to be rapidly rolled out but gave no figures and few details of a plan likely to involve bilateral loans.

They reconvened on Tuesday with the other finance ministers from the 27-country European Union, and the German and Spanish ministers reiterated that Greece did not need help for now.

Swedish Finance Minister Anders Borg said things were looking up after Athens announced extra austerity measures to cut a bloated public deficit and tame a national debt that is bigger than Greece's entire gross domestic product.

We have a situation which is much better than one month ago, said Borg, who said earlier this year Greece's statistical reporting on public finances was basically fraudulent.

Initial financial market reaction was muted, with no dramatic change in the euro exchange rate or bond yields, both of which have been buffeted by fears about Greece's ability to honor its debts and what this would mean for the monetary union more broadly.

German Finance Minister Wolfgang Schaeuble, who left Brussels early, told the German parliament there was increasing cause for concern that speculators were targeting currencies and the competitiveness of all EU states must be strengthened.

Ministers did not say when a final decision on aid for Greece was likely. A German government spokesman said Berlin did not expect any decision to be taken at an EU summit next week.

Germany, Europe's biggest economy and the country that would be the linchpin of any support, is reluctant to bail out Greece and above all to rush into anything before Athens shows it is willing to take the painful steps needed to fix its finances.

GREECE COULD GET BILATERAL AID

Help for Greece could take the form of bilateral aid but ministers ruled out loan guarantees, said Jean-Claude Juncker, the Luxembourg prime minister who chaired Monday's talks.

A statement published by the euro zone ministers provided no figures. It commended Greece's redoubled efforts to repair its public finances and said the rest of the Eurogroup club of common currency countries stood ready to help.

Greece this month unveiled extra austerity measures to knock its deficit from 12.7 to 8.7 percent of gross domestic product this year, including cuts in public sector pay and tax rises. A poll on Sunday showed most Greeks saw this as a good step.

The measures and the euro zone's verbal backing have helped ease the premium Greece must offer over benchmark German bonds as it seeks to refinance some 20 billion euros ($27.5 billion) in debt coming due in April and May.

But the so-called spread, or debt financing premium, remains unsustainable at levels upwards of 6 percent, Greek Finance Minister George Papaconstantinou and Prime Minister George Papandreou have said.

The price investors demand to hold Greek debt instead of German benchmark bonds narrowed on Tuesday morning. It came in 12 basis points in early trading, but remained close to 300 basis points, or 3 percent, above German Bund yields.

EU LEADERS TO HAVE LAST WORD

Juncker said EU leaders would have the last word on any aid if it was needed. Belgian Finance Minister Didier Reynders suggested options were still far from set in stone.

Economists said the announcements were a step in the right direction even if the situation remained fuzzy.

There is still much uncertainty over exactly how the package would work, not least over what would actually trigger it, said Ben May, analyst at Capital Economics, a consultancy.

Goldman Sachs economist Erik Nielsen said Greece would need to raise another 8-10 billion euros on markets before mid-May and that this could be the trigger point if the refinancing proved too stressful.

If this is not feasible at an acceptable cost, then help will be provided, he said.

Dutch Finance Minister Jan Kees De Jager said any help would be tied to tough conditions of the kind that the International Monetary Fund applies when rescuing countries in trouble.

European Central Bank Executive Board member Lorenzo Bini Smaghi said constructive ambiguity could be useful to put pressure on countries or institutions to take necessary steps.

Writing in the Financial Times, he said authorities should be ready for a bailout as a last resort to prevent worse problems developing.

(With reporting by Jan Strupczewski and John O'Donnell; Writing by Brian Love; editing by Timothy Heritage and Dale Hudson)

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