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UPDATE 2-Greece appoints austerity stalwart to be central bank chief

* Yannis Stournaras to be Greece's new central bank chief

* Stournaras advocates tighter economic integration of euro zone

(Adds detail, comments)

ATHENS, June 11 (Reuters) - Former Greek finance minister Yannis Stournaras, who spearheaded Greece's return to economic stability after it nearly crashed out of the euro zone, is to become the next Bank of Greece governor, the central bank said on Wednesday.

Stournaras, 57, will take over from George Provopoulos when the latter's term ends on June 19, days after being replaced as finance minister as part of a wide cabinet reshuffle by Prime Minister Antonis Samaras.

His appointment means he will be a member of the European Central Bank's Governing Council.

Stournaras is an economist, a former CEO of a commercial bank, headed Greece's influential think-tank IOBE, and was a government economic adviser when Greece strove to join the euro zone. He has been credited with dragging the country back from the brink of bankruptcy when he was appointed finance minister in 2012.

Since then, Greece has steadied its finances and is now expected to return to marginal growth this year after a six-year economic slump - the country's worst peacetime economic crisis.

Under Stournaras, Athens returned to bond markets in April after a four-year exile with a successful sale of 3 billion euros of bonds and posted a primary budget surplus in 2013, making it eligible for further debt relief by the EU and IMF.

Still, Stournaras has been a magnet for criticism by anti-bailout groups who have attacked him for implementing the harsh spending cuts demanded under Greece's 237-billion-euro European Union/International Monetary Fund bailout.

VILIFIED BY OPPOSITION

Greece's main opposition, leftist Syriza party said earlier on Wednesday it was against Stournaras's appointment because he was a proponent of the austerity policies it rejects.

"Mr. Stournaras will continue to defend the bailout policies from his new post," Syriza spokesman Panos Skourletis was quoted as saying by Greek news website skai.gr.

Syriza leader Alexis Tsipras - emboldened by the party's victory in EU elections in Greece last month - had warned Samaras not to appoint a new governor without consulting him.

Tsipras met ECB President Mario Draghi on Tuesday in Frankfurt, pushing for a sizable cut on the nominal value of Greece's debt.

Stournaras, Greece's government and European policymakers all reject that option, preferring instead to make the debt more easily manageable by extending maturities and reducing interest.

As finance minister, Stournaras has been a keen advocate of tighter economic integration in the euro zone, by coordinating member states' financial policies and devising financing tools to spur growth in cash-strapped southern European countries.

Countries with "excessive" budget or current account surpluses should "adopt economic policies contributing to the rebalancing of the European economy", he said in a March speech.

Stournaras replaces Provopoulos, a 63-year old economist and former bank CEO, who oversaw the recapitalisation of Greece's banking system under the terms of the country's international bailout. Provopoulos had publicly said he wanted a second term.

"I spent many sleepless nights not knowing in what currency I would wake up to," Provopoulos told reporters on Wednesday after a speech to cental bank staff where he got a standing ovation.

(Editing by Jeremy Gaunt)