Greece's government may request an extension of its loanagreement for six months, according to a person familiar with thematter, a step that could ease a standoff with creditors over thecountry's future financing.

Prime Minister Alexis Tsipras's government intends to make therequest Wednesday, the person told reporters in Brussels, askingnot to be named as the deliberations are private. Talks arecontinuing between Greece and its creditors on the conditions thatwould be attached to the extension of the loan accord, the personsaid.

While Greece's creditors in the euro area indicate that theremay be some room for flexibility within the margins of the currentrescue program for Tsipras's government to pursue its policies,they insist that Greece first agree to extend the agreement. Arequest for an extension, albeit with the terms still unclear,might help break the deadlock that prompted talks to collapse earlyMonday.

“If we want to avoid going into unknown territory, the only wayis to have some time and some tranquility,” French Finance MinisterMichel Sapin told reporters in Brussels Tuesday. “That means theprolongation of the program. It's the only legal toolavailable.”

U.S. Treasuries extended declines on the news as demand forhaven assets eased, pushing 10-year yields up seven basis points to2.12 percent. The euro advanced 0.5 percent to $1.1415.

–With assistance from Nikos Chrysoloras in Athens and AnchaleeWorrachate in London.

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