Euro zone finance ministers will hold talks on Sunday to detail how a safety net for Greece would work, European officials said on Saturday, as Greece's prime minister indicated Athens may use the mechanism if necessary.

The debt-stricken country has not asked to trigger the EU/IMF aid mechanism but the teleconference will aim to be ready if and when it does require it, officials said. The ECB and the European Commission will also take part in the talks.

There will be a teleconference on Sunday on Greece in the usual Eurogroup composition, Guy Schuller, a spokesman for Juncker, said. Greece has not asked for help, but you have to be ready if they do.

Markets pounded Greek bonds and banking stocks this week, driving the euro zone weakling's borrowing costs to new highs and pushing it closer to tapping the safety net agreed last month to help it as a last resort.

Greek Prime Minister George Papandreou indicated in a newspaper interview that Athens may use the aid mechanism if markets remain skeptical.

The question remains whether this mechanism will convince markets just as a gun on the table. If it does not convince them, it is a mechanism that is there to be used, Papandreou was quoted as saying in an advance copy of To Vima's Sunday edition.

His Finance Minister George Papaconstantinou, however, told another newspaper that Greece considered it was important to clarify how the EU-IMF aid mechanism would work but believed it would not need to use it.

The aid mechanism is a very important safety net. We have repeatedly said that it was crucial to create and detail it, but we hope and believe that Greece will not use it, Papaconstantinou told Realnews newspaper.

Spanish government sources said Sunday's teleconference was scheduled for 8:00 a.m. EDT (1200 GMT) and would discuss concrete mechanisms of aid for Greece.

Juncker and European Economic and Monetary Affairs Commissioner Olli Rehn would probably hold a news conference on Sunday at 1400 GMT in Brussels, Schuller said.

INVESTORS SCEPTICAL

Euro zone countries have pledged to lend to Greece if it cannot finance itself in the market to tackle its 300 billion euro ($401.2 billion) debt mountain, but markets have not been convinced, with investors saying the plan lacked details.

The euro zone teleconference will take place just two days before Greece auctions a total 1.2 billion euros ($1.6 billion) of six- and 12-month T-bills on April 13, but neither Schuller nor Greek officials would comment if the timing was linked to the auction.

Until now all (bond) issues have been oversubscribed, that shows that despite the turbulence in bond markets there is interest and trust from investors, Papaconstantinou said in the newspaper interview, conducted on Friday. Our target remains to have better rates and borrowing terms.

Deputy finance ministers and central bankers of the 16 countries sharing the European single currency decided this week that any emergency loans would be made on terms almost identical to standard IMF bailouts if Greece needed them.

But the news brought only momentary relief to credit markets because Fitch Ratings cut Greece's credit rating to BBB-minus -- its lowest investment-grade rating and just above junk status -- and signaled further downgrades were possible.

Papandreou, in the newspaper interview, said Greece belonged in the euro zone.

The euro is not to blame for our problems. Greece belongs in the euro zone. Any other scenario is ridiculous, he said.

Asked about Germany, which has so far been very reluctant to come to the rescue of its debt-laden euro zone partner, Papandreou told To Vima: Like all European countries, Germany has its own internal problems due to the international crisis.

But it is a delusion to believe the solution to these problems can be found outside or at the expense of the rest of Europe. Germany's prosperity depends on the prosperity of its main trading partners which are the European countries.

Papandreou held separate phone calls on Friday with Juncker, EU President Herman van Rompuy, EU Commission President Jose Manuel Barroso and ECB head Jean-Claude Trichet, a Greek official said.

(Reporting by Jan Strupczewski in Brussels and Lefteris Papadimas in Athens; Additional reporting by Julien Toyer; Writing by Ingrid Melander; Editing by Susan Fenton)

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