Greek political leaders are set to announce agreement on apackage of austerity measures, clearing the way for a deal to cutthe nation's debt and win its second rescue in two years.

An announcement from Prime Minister Lucas Papademos's office isexpected shortly, a government official who declined to beidentified said today by telephone.

The accord comes less than four hours before euro-region financeministers hold an emergency meeting in Brussels to discuss the 130billion-euro ($172 billion) lifeline and the swap that will imposea loss of about 70 percent for investors.

“Some key pieces are falling into place,” Holger Schmieding,chief economist at Berenberg Bank in London, said in an e-mailednote. “Barring any last minute hitch, Europe may soon have defusedthe Greek issue for a while.”

A Greek deal would reinforce the reduction of contagion risks asinvestors discriminate between “small countries with seriousproblems (Greece, Portugal) and much bigger countries with smallerproblems (Italy, Spain),” Schmieding said.

Talks over austerity measure between Papademos, who is theinterim prime minister, and the so-called troika — the EuropeanCommission, European Central Bank and International Monetary Fund —had stalled over 300 million euros of pension cuts.

Creditors are meeting in Paris today over a deal in which theywould accept an average coupon of as low as 3.6 percent on new30-year bonds in the exchange. The aim of the transaction is toreduce the country's debt burden to 120 percent of gross domesticproduct by 2020 from 160 percent last year.

A formal offer for the debt swap must be made by Feb. 13 toallow all procedures to be completed before the March 20 bond comesdue. Parliament may be called to vote on the terms of the writedownon Feb. 12, state-runs Athens News Agency reported yesterday,without saying how it got the information.

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