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HIGHLIGHTS-Eurogroup comments on Spain, Greece, Portugal, Cyprus, ESM

(Adds quotes from French finance minister)

LUXEMBOURG, Oct 8 (Reuters) - Euro zone finance ministersmet in Luxembourg on Monday to discuss Spain, Greece, Portugaland other issues related to the region's debt crisis, includingwhat needs to be done to establish a single supervisoryauthority for euro zone banks.

Following are comments from Eurogroup Chairman Jean-ClaudeJuncker, European commissioner for economic affairs Olli Rehnand IMF Managing Director Christine Lagarde at the final pressconference after the ministers' meeting:

FRENCH FINANCE MINISTER PIERRE MOSCOVICI On Greece

"France's position is ... that Greece must keep itsengangements and on this basis the euro zone is ready to keepengagement.

"In this respect, the progess that we have seen issatsfaying and positive."

EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER: On Greece

"We were happy to learn that substantial progress has beenmade over the last weeks. We called on the Troika and Greece tofinalise their negotiations and agree on ways to close thefiscal gap for 2013 and 2014 as soon as possible."

"We are also stressed that before the next disbursement,Greece must clearly demonstrate its strong committment to theprogramme and the 89 prior actions agreed in March should beimplemented by the 18th of October at the lastest."

"We were reassured by the strong resolve of the Greekgovernment to push ahead with reforms and consolidation,building on the large adjustments already achieved and on theimproved competitiveness obtained.

We will of course continue to monitor the situation closelyand are ready to reconvene once the review process by the Troikahas been completed. I have to add that personally I am impressedby the performance of the Greek government, by the willingnessof the coalition parties in Greece to undertake whatever willhave to be undertaken to respond to our wishes and to take intoaccount the need nation."

IMF MANAGING DIRECTOR CHRISTINE LAGARDE: On Greece

"On Greece, clearly there is progress on the ground. Moreneeds to be done on all fronts - fiscal, structural reforms,financing, debt - clearly we will be working on that that. Themission that is working as part of the Troika is not going toTokyo. They will be stationed in Athens to do the work thatneeds to be done.

On Spain

"On Spain, we are sending our team, just after our annualmeeting in Tokyo at the end of next week, for the firstmonitoring exercise of the financial sector reform which is aswe see it from a far is progressing well. "

On Portugal

"On Portugal, I shall be recommending to the board theapproval of the review of the Portuguese programme so that thedispersement of the IMF tranche can take place"

On Cyprus

"On Cyprus, a team will be in Cyprus in the second half ofOctober."

ESM MANAGING DIRECTOR KLAUS REGLING

"On Spain, we are ready to provide the financing to the FROBfor the bank recapitalisation of Spanish banks, probablystarting in November and we are preparing the transfer of EFSF... to the ESM."

COMMENTS BY EURO ZONE FINANCE MINISTERS AHEAD OF THEMEETING:

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."

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. 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/