Fresh Greece bailout talks as UK gives £4.2bn to Portugal deal

European governments yesterday discussed the prospect of a fresh multi-billion euro bailout for Greece - just a year after committing €110bn - in a bid to calm the markets and stabilise the region's currency.

At a meeting in Brussels - and in the enforced absence of IMF head Dominique Strauss-Kahn (pictured), who is facing rape allegations in New York - 17 finance ministers of the eurozone and ten ministers from outside the single currency agreed on a €78bn (£67.8m) bailout for Portugal.

It is understood the UK's contribution to that deal is in the region of £4.2bn.

Ministers also signed off on the permanent eurozone bailout fund, the European stability mechanism, which is to shore up the currency from 2013, the Guardian reports.

However, a major talking point was the possibility of an extended rescue package for troubled Greece, which has so far had no British involvement.

Reports suggested representatives from the IMF, European Central Bank and European Commission were displeased by Athens' adherence to promises of drastic spending cuts, so further intervention may not come in the form of capital.

The European Commission said new "arrangements" were possible, with the options including a combination of cutting the interest rate on the €110bn bailout money, extending the repayment terms and topping up the loans by up to €60bn, writes the Guardian.

But the emphasis in Brussels and EU capitals was on first urging greater austerity on Athens.

Greek prime minister George Papandreou has been told he will have to show convincingly that he is committed to selling off Greek public assets through a radical privatisation programme before the eurozone will return to his rescue.