Bank chief rejects Greek loan help

EUROPEAN Central Bank president Jean-Claude Trichet has spoken out against offering low-interest loans to debt-encumbered Greece.Mr Trichet's demand for stringent terms and German Chancellor Angela Merkel's push for sanctions against nations that breach deficit limits heightened the chance that Greece will leave a European Union summit this week empty-handed.That could force Prime Minister George Papandreou to decide whether he is ready to fulfil his threat and turn instead to the International Monetary Fund."There shouldn't be any subsidy element, no concessionary element" in any loan to Greece, Mr Trichet told politicians in Brussels.Dr Merkel said in Berlin there was no need for EU leaders to make any "concrete decisions" on Greek aid this week.Conflicting signals from European capitals before the summit of EU leaders triggered three days of declines in Greek debt that pushed the yield on 10-year bonds to 6.44 per cent yesterday, the highest since February 25.The surge in financing costs led Mr Papandreou to say last week that his country, which needs to sell about ‚10 billion ($A22 billion) of bonds in coming weeks, is one step away from not being able to borrow. Greece must finance ‚20 billion of securities maturing next month and in May.Investors more than doubled the risk premium they demand on Greek 10-year bonds over their German equivalents amid its struggles to cut a 12.7 per cent budget gap, the most in the euro zone.The spread between yields on 10-year Greek and German bonds jumped to as high as 396 basis points in January. It was 337 basis points yesterday.Mr Papandreou wants EU leaders to give details of an aid package that will help him steer Greece's borrowing costs lower and avoid the need for a bailout.But Mr Trichet rejected Mr Papandreou's call, saying a level of spreads was not part of the conditions for any loan. He said a package might only be justified if the euro zone's stability faced a "grave and immediate" threat.Last week Mr Papandreou said he might seek help from the IMF if Europe did not act quickly to support Greece.BLOOMBERG