Euro-area finance ministers seeking to step past the largestsovereign debt restructuring in history will attempt to gain afoothold this week as they grapple with implementing the latestGreek bailout.

Ministers from the 17 nations that share the euro will gather inBrussels today to sign off on the 130 billion-euro ($170 billion)second package for Greece after bondholders agreed last week totake a loss on the country's debt. They'll also focus on Spain'sbudget-cutting efforts and Portugal's aid program, underscoringtheir desire to prevent contagion.

The debt swap seeks to wipe more than 100 billion euros offGreece's books and contain an economic collapse in the country asEuropean overseers work to hold Greek leaders to their commitments.The difficulties the government in Athens will confront in meetingcreditors' demands have prompted speculation of still furtherassistance.

“Nobody can now exclude that Greece at a single moment may needa third bailout,” German Finance Minister Wolfgang Schaeuble wascited as saying in an interview published today in Belgiannewspaper De Morgen. “I have all confidence that the measures thatwe have taken and that Greece must now implement – - no simpleexercise — will bring the country on the road to recovery.”

European stocks and the euro dropped today before the financeminister meeting, which is due to begin at 5 p.m. The Stoxx Europe600 Index retreated 0.4 percent, while the euro declined 0.2percent to $1.3100 as of 9:18 a.m. in Berlin.

The single currency slid on March 9 after Greece pushed throughthe swap and said it would force some investors to participate.That triggered a “restructuring credit event” and will lead to thesettlement of about $3 billion in credit-default swap contracts,according to the New York-based International Swaps &Derivatives Association.

The debt swap was a “sad day” for Europe, because the default onGreek sovereign debt presented a scenario that European leaders hadtried to avoid since the beginning of the crisis, economists HolgerSchmieding and Christian Schulz of Berenberg Bank in London wrotein a note to clients.

“The eurozone is now very much in uncharted territory,”Schmieding wrote, adding the forced participation by way ofcollective-action clauses and the ISDA's decision were predicted byinvestors and will have a “modest impact” on markets.

Payments Released

Euro finance ministers agreed on a March 9 conference call thatGreece had met the terms for bailout funding and released 35.5billion euros in payments and interest to bondholders, with therest of the amount set to be approved today.

The measures are designed to reduce Greece's outstanding debt to120.5 percent of output by 2020. With the country now in its fifthyear of recession and youth unemployment climbing above 50 percent,the government must continue to meet targets laid down byinternational creditors to receive funding at three-monthlyintervals. Elections in the country due in April or May mightderail efforts to maintain austerity.

“We continue to see huge risks to the implementation of thesecond Greek bailout program, even if, as we assume, the debtexchange proceeds as planned,” Chris Scicluna, head of economicresearch at Daiwa Capital Markets Europe in London, wrote in aMarch 8 note to clients.

Yields on Greece's new bonds may climb to as high as 20 percentamid “material risks” stemming from implementation of terms for thedebt exchange, Morgan Stanley said in a March 8 report.

With the debt transaction out of the way and the EuropeanCentral Bank signaling that the region's economy is stabilizing,Chancellor Angela Merkel will meet with Italian Prime MinisterMario Monti in Rome tomorrow. Italian 10-year bonds rose for aninth week last week, the longest run of gains since 1998.

European leaders will tackle the prospect of bolstering theregion's firewall this month, a move that has been blocked byGermany. Pressure may increase after the International MonetaryFund said March 9 it will scale back its aid to Greece. Itsintended 18 billion-euro contribution would be 14 percent of theoverall package, compared with the 27 percent it offered forGreece's first bailout in May 2010.

The IMF under Managing Director Christine Lagarde has joined theU.S., Canada and other nations in pressing European leaders to domore to stave off the debt crisis.

Ministers today will also discuss Spain, where Prime MinisterMariano Rajoy defied EU allies by raising the country's 2012budget-deficit goal. Rajoy earlier this month placed the target at5.8 percent of gross domestic product from 4.4 percent.

Spain expects to be able to clarify any misunderstandings withEuropean partners about the decision at the Brussels meeting, agovernment official said on March 9. Spain is committed to meetingnext year's target of 3 percent of GDP, the official said, addingthat Spain is unlikely to be sanctioned.

Bloomberg News

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