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HIGHLIGHTS-Euro zone finance ministers meet to discuss Spain, Greece

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LUXEMBOURG, Oct 8 (Reuters) - Euro zone finance ministersgathered in Luxembourg on Monday to discuss Spain, Greece andother issues related to the region's debt crisis, including whatneeds to be done to establish a single supervisory authority foreuro zone banks.

Following are comments from the ministers and other seniorofficials as they arrived for the talks:

DUTCH FINANCE MINISTER JAN KEES DE JAGER On Greece

"Greece must find away out of its crisis through reforms and(fiscal) consolidation. That cannot be done by other countries.They must do that. We are waiting for the Troika report, wecan't get ahead of ourselves, but it is really up to Greece toresolve this on its own. That is all important and the ball isin their court. There are risks attached (to the loans toGreece)."

EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER:

"The start of the ESM marks a historic milestone in shapingthe future of the European monetary union. The euro area now isequipped with a permanent and effective firewall, which ofcourse is a crucial component in our strategy to ensurefinancial stability in the euro zone."

On Spain:

"To a large extent I'm satisfied with the fiscalconsolidation measures taken so far by the Spanish government.It is not up to me nor to us as members of the eurogroup toadvise the Spanish government to make a request."

ESM MANAGING DIRECTOR KLAUS REGLING:

"The instruments of the ESM are the same as the instrumentsof the EFSF, namely country programme loans under fulladjustment, precautionary arrangements, interventions on primaryand secondary market and bank recapitalization via the treasuryof a country. Those are the instruments of the EFSF and thoseare also the instruments of the ESM.

For the ESM, our body is in the process of looking at theoption of inserting this tool (of leveraging first lossguarantee) also in the ESM framework but this has not yethappened so far. My expectation is it will but it has nothappened so far."

EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN

"The inauguration and start of operations of the EuropeanStability Mechanism is a very important milestone for the eurozone and the the European Union. It provides the euro zone witha robust and permanent firewall and it provides us with a strongtoolbox of effective and flexible instruments.

Thinking of where we were two and a half years ago when wehad no instruments of crisis management, we had to create theGreek loan facility and the temporary European facility, we aremoving forward and we are supplementing the economic andmonetary union with one important building block.

Nobody is in party mood but I am less pessimistic for themoment for the euro zone than in the spring."

IRISH FINANCE MINISTER MICHAEL NOONAN

On direct recapitalisation of banks by the eurozone'spermament rescue mechanism, the ESM:

"The policy position as set out by the heads of state andgovernment on the 29th of June is the policy that prevails. Wehave had assurances of that from the (European) Commission andfrom the European authorities."

EUROGROUP CHAIRMAN JEAN-CLAUDE JUNCKER On idea of single euro zone budget: "I myself am not opposed in principle to a euro zone budget. On Greece:

"I don't think that we will have any major decisions onGreece (today). We will be briefed by our Greek colleagues andby the troika (the inspectors from the European Commission, IMFand ECB) on the negotiations between Greece and the troika.

Asked about a decision soon on Greece: "Hope never dies." LUXEMBOURG FINANCE MINISTER LUC FRIEDEN

"Spain doesn't need any help at this moment. They didn't askfor any help.I think we should deal with such a request when itcomes but so far the Spanish government is undertaking reformswhich go in the right direction.

Asked whether Greece needs more time or money

"Greece is doing a lot of efforts. It's very difficult downthere. And I think if we need to give them additional time, ifthat does not require a lot of additional money, we shouldsupport Greece. This is not a one-way street. It requires thatgreece is undertaking and continues to undertake the reformswhich the government is committed to.

On whether funds from the euro zone's permanent rescue fund,the ESM, should be used for banks' legacy problems:

"We shouldn't talk up a new problem every day. This is asubject that needs to be sorted. We should not rule out to doeverything possible if we want stability, to check if we canmake use of the instruments that we have when something has gonewrong in the banking sector. At least now we have instruments."

AUSTRIAN FINANCE MINISTER MARIA FEKTER

"We like our currency, the euro, and we will not onlyprotect it through the central bank but we will also protect theeuro zone, the states when they get into difficulty, throughthese instruments (ESM).

"We have come a long way towards stability but we are notout yet over our problems. We must stabilise the banks in spain,see that greece fulfills its conditions. There will likely be anapplication from cyprus. Slovenia has difficulties. We must seethat in europe the debts don't get over our heads.

"We have the banking application from Spain. It has apotential capacity of 100 billion euros. We are likely to heartoday that this 100 billion euros is not all needed, that Spainneeds significantly less."

GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE On Spain

"Spain needs no aid programme. Spain is doing everythingnecessary, in fiscal policy, in structural reforms. Spain has aproblem with its banks as a consequence of the real estatebubble of the past years.

"That's why Spain is getting help with bankingrecapitalisation. And of course Spain, like other countries, issuffering from the problem of contagion, speculation onfinancial markets... but Spain needs no aid programme. That'swhat the Spanish government says again and again."

On Greece

"The chancellor is not the troika. The chancellor istravelling to greece just like she travels to many othereuropean countries and just like the greek prime minister cameto Berlin.

"We have intensive bilateral cooperation to help Greece inbuilding a competitive economy.

"Germany is doing whatever we can do to help Greece on itsdifficult path. But the troika has a job of its own. It has toreport whether Greece is fulfilling the obligations from thesecond aid programme and if the troika can report that then theconditions for the disbursment of the next tranche are given.But that's not on the agenda of the visit in Athens."

On direct banking recapitalisation from the ESM

"The agreements will be stuck to. That's what we do withGreece, with Portugal and of course as with the agreement of theheads of state and government of end-June that says that once aEuropean bank supervision has been implemented that then as partof the further conditions direct bank recapitalisation is anoption but further conditions means an application by the memberstate in question, an adjustment programme that is agreed withthe member state and we will talk about implementing a europeanbanking supervision tomorrow. That's harder done than agreed."

(Reporting by Annika Breidthardt, John O'Donnell, Eva Kuehnen,Robin Emmott and Jan Strupczewski in Luxembourg; editing by LukeBaker)

Keywords: EUROZONE EUROGROUP/