An influential member of Germany's governing coalition backed the possibility on Tuesday of easing the terms of Greece's euro zone bailout, a move that might help Athens better weather the debt crisis.

Michael Meister, deputy parliamentary leader of Chancellor Angela Merkel's Christian Democrats, said he saw logic in extending the repayment schedule for the 110 billion euros of loans granted to Greece on May 2, 2010.

His intervention followed European Central Bank policymaker Nout Wellink, who said on Monday he was open to the idea of extending maturities on all Greek debt, becoming the first senior ECB official to admit the possibility of a restructuring publicly.

The direction of the debate is sensible, Meister told Reuters, adding that any softening of the terms would not come without a 'quid pro quo' down the line. For further aid, Greece must also offer additional measures, he said.

Greece's finance minister said on Monday he hoped Athens might get more time to repay the EU/IMF bailout loans -- already extended from three to seven years -- at a lower interest rate.

European Union and IMF inspectors are in Greece to assess whether the country's new austerity plans are tough enough, a review that could determine whether the loan terms are changed.

If they were to be altered, it could help Greece better manage its massive sovereign debt pile, which is set to rise to 340 billion euros, or 150 percent of annual output, this year.

Without a massive pick up in growth or one-off income from privatizations, Greece is not expected to be able to finance its debts, which means a restructuring of some kind or another is probable.

That would alarm bondholders, who include many major French and German banks and the European Central Bank -- 70 percent of Greece's debt is owned by foreign institutions.

Two German government advisers said last week a Greek restructuring was inevitable, and financial markets appear to hold a similar view.

Yields on Greek 2-year government bonds now stand around 25 percent -- an unsustainable figure that implies Greece cannot finance itself without at least rescheduling some repayments.

Under the umbrella debt restructuring there are various options, ranging from writing down the value of the debt by a set amount, known as a haircut, to rescheduling when the debt will be repaid, which is a softer form.

JP Morgan said the likelihood of a Greek restructuring this year was rising, although it was not guaranteed.

We are not yet ready to forecast that a debt restructuring will occur this year, but we have to recognize that the risk has risen relative to our baseline assumption that any decisions about debt restructuring would be delayed until 2013, it said.

But Finance Minister George Papaconstantinou said on Tuesday any restructuring would be a disastrous mistake.

It would have a very big cost and we would not have the benefit, we would stay out of markets for 10-15 years, the wealth of Greek pension funds would suffer writedowns, we would have problems in the banking system and hence the real economy.

LISBON BAILOUT NEAR?

In Portugal, EU and IMF experts are expected to wind up nearly three weeks of negotiation over Lisbon's bailout in the next day or two, sources in Portugal said.

Euro zone officials say Portugal is likely to need about 80 billion euros of assistance, but Portuguese newspaper Diario Economico reported on Tuesday the figure could be greater than 100 billion euros ($148 billion), including up to 10 billion euros in aid for Portugal's banks.

The newspaper did not cite any sources but said the banking sector needed at least 5.3 billion euros to cover a hole left by the failure of BPN, a bank nationalized in 2008, as well as additional funds to help banks raise their capital ratios.

Officials in Brussels have described Portugal's bailout as more complicated than either that of Ireland, which received 85 billion euros last November, or Greece, which agreed its 110 billion euro program on May 2, 2010.

The problem for Lisbon is that it has high public sector debts, banking problems and structural economic shortcomings, including rigid labor markets and a costly state pension system, all of which require attention in the same package.

At the same time, the country is to hold a parliamentary election on June 5 following the resignation of the previous government, which collapsed when its plans for austerity measures were voted down by the parliament.

The political limbo means the EU and IMF are negotiating with politicians who are thinking about re-election. The caretaker government will have to win the endorsement of major opposition parties before agreeing any bailout deal.

But even then, there is the risk that any package will not be approved by all 17 countries in the euro zone.

Finland, where the eurosceptic True Finns party came third in a parliamentary election last month, would likely find it impossible to back the bailout if the True Finns end up being in the next governing coalition.

Jyrki Katainen, whose right-leaning party came top in the polls and who is expected to be the next prime minister, is to begin formal coalition talks on May 18.

The True Finns have said definitively that they will not support a bailout of Portugal, a position that may rule them out of government. But it is still unclear whether Finland will be able to form a government that backs Portugal's bailout in time for Lisbon to receive the money it needs by a June 15 deadline.

(Additional reporting by Jan Strupczewski in Brussels and Andrei Khalip in Lisbon; writing by Luke Baker; editing by Mike Peacock)

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