* No other euro zone talks *
Russia is in the process of negotiations on a loan for cash-strapped Cyprus, Interfax news agency quoted Finance Minister Alexei Kudrin as saying. However, he did not say what sum is to be lent, even though previous reports said the Cyprus government was in talks for a 2-2.5 bln euro five-year loan either from or set up through the Russian government to refinance maturing debt and plug a deficit hole.
Cyprus has around 1 bln euros in debt maturing in early 2012.
Russia, one of the world's top forex reserves holders, is among several countries that are likely to become lenders to Cyprus, but it is not holding bilateral talks about financial aid to any other euro zone country.
Kudrin told the Reuters Russia Investment Summit in Moscow on Tuesday that the country, which has over $540 bln in gold and foreign exchange reserves, could invest in a common euro zone bond if one was approved by member states but would also continue investing in sovereign bonds.
"As soon as you see our gold and forex reserves rising by $10 bln, you can assume that $4.5 bln is invested in euro zone countries' bonds," Kudrin told the summit.
"We are ready to discuss new mechanisms of support for the euro zone… We always diversify our investments. We would be ready to invest some money through a common bond but will also continue working through sovereign (bonds)," he said.
"Italy has not approached us. Euro zone countries have not approached us in general… At the moment we are holding talks only with Cyprus. We have good progress at talks. They will conclude within one month," Kudrin added.
He declined to give other details. His comments follow a Financial Times report that Rome had asked China to buy "significant" quantities of its debt and an Italian bond auction that underlined mounting fears over the currency bloc's third largest economy.
BREATHING SPACE
Finance Minister Kikis Kazamias said on Friday it was known that authorities had been seeking long-term financing, but he was non-committal on possible sources of credit.
"For some time now we have been looking for sources of long-term financing to give us some kind of breathing space – not solve the problems we are trying to find solutions to … but to give us a breather on the management of public debt.
"Provided that the conditions of financing and lending are advantageous and that there are no irrational demands, then it would be on the table for negotiation," Kazamias told Astra radio station.
Politis and Phileleftheros cited government sources as saying consultations were underway with Moscow but nothing had been finalised. Phileleftheros said the two sides were very close to a deal.
Yields on Cypriot bonds on secondary markets have surged in recent months after repeated downgrades of the euro zone minnow by ratings agencies concerned over fiscal slippage, and exposure of the island's banking sector to Greece.
Current high yields have fanned speculation that the island could be a candidate for an EU bailout because its borrowing options seem limited.
Politis said the interest rate on the loan, which would be for up to 5 years, would be 4.5%. It would be used to cover liquidity and bond refinancing requirements over the next 18 months.
A 10-year bond issued to international investors in February 2010 was bid at 11.877% on Friday, from around 6.20% in early May.
Last Wednesday, Kazamias said that several options were under consideration for easing high yields. Among those options, he said, was an ECB buyback of Cypriot bonds, though he said no firm decisions had been taken on that.
