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Greece confirms will ask for 6-month loan extension

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Focus remains on Greece as there are some new developments on the Greek debt negotiations. The Greek government confirmed today that it will ask for an extension for up to six months of a loan agreement with the euro zone, on conditions to be negotiated.

The rumour was leaked late on Tuesday and Asian equities tracked a mild bounce on Wall Street to edge higher on Wednesday. European shares also rose on Wednesday, led by southern European indexes.

A source said the request would be similar to a common statement proposed by European Economic Affairs Commissioner Pierre Moscovici. Greece says it had been willing to accept this but the document was withdrawn shortly before a meeting of euro zone finance ministers on Monday.

The new government of Prime Minister Alexis Tsipras has refused to seek an extension of Greece’s bailout programme which expires on February 28, rejecting its requirements that austerity policies be imposed.

Tsipras has made a distinction between the full bailout programme and the issue of Greece’s debts. “A loan agreement is different from a bailout,” he told lawmakers from his left-wing Syriza party in Athens earlier in the day.

“We’re not accepting ultimatums. We’re not going to request an extension of the programme/bailout,” the official said on condition of anonymity. “We’re examining the possibility of requesting an extension of the loan agreement, clearly differentiating it from the programme/bailout.”

The Eurogroup has so far made clear it is unwilling to separate funding for Greece and its debt repayment obligations from the issue of austerity and reform promises made by the previous conservative-led government. Its chairman Jeroen Dijsselbloem has said an extension of the bailout programme would be under conditions little different from the present deal.

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