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Greece could exit bailout early

Athens - Greek Prime Minister Antonis Samaras expects his country to exit its international bailout ahead of schedule, and to cover its own financing needs from next year, he said on Tuesday after talks with German Chancellor Angela Merkel.

"We need to become a normal country, and we've proven that we are reliable and we can stand on our own feet," he told a news conference with Merkel, who hailed the "first tender shoots of success" in Greece thanks to painful economic reform efforts.

Samaras rejected talk that he wanted a "divorce" from one of Greece's lenders, the International Monetary Fund, but for the first time publicly acknowledged that Greece could forego some IMF aid instalments. Funding from the eurozone ends in December 2014, while IMF aid expires in the first quarter of 2016.

"I don't accept the term 'divorce', even if it's a velvet one," he said, adding that talks on further debt relief should start after the next EU/IMF review and bank stress tests.

"I believe this cooperation will be completed ahead of schedule. If that happens, it would be a success, not a divorce."

"I believe that we can certainly cover our funding needs from next year," Samaras said. "We will see what happens with the next bailout tranches."

Kostas Boukas, head of asset management at Athens-based Beta Securities: "It's evident from what Samaras said that the Europeans and the Greek government want the IMF to exit the program. They don't want the IMF to continue supervising the reform programme for Greece, a euro zone country."

Merkel put Greece's success down to its persistence with the type of structural reforms Germany has insisted on - which have made her a hate figure in Greek anti-austerity protests.

Samaras is hoping that an early end to the bailout, deeply hated for the austerity demands that come with it, will help him to regain ground on the left-wing Syriza party, which is well ahead in opinion polls with an election potentially on the cards next year.

Strikes resume

That discontent came to the fore once again on Tuesday when Greek public sector workers launched the first nationwide strike after the summer to protest against the job cuts prescribed by the international lenders.

During a six-year recession, unemployment has risen to around 27%, twice the euro zone average. Tuesday's strike by teachers, doctors and municipal workers shut down state schools, hospitals operated on emergency staff, and trolleybus services were briefly disrupted.

The €240bn package from the EU and IMF has kept Greece afloat since the second half of 2010. It nearly crashed out of the euro zone two years ago but has now brought its public finances under control.

Samaras would like further relief on a national debt that is projected to top 177% of gross domestic product in 2014 - most of it owed to the EU or the IMF - though investors fear his determination to exit the bailouts may hurt his chances.

Greek 10-year yields rose 17 basis points to 6.08%, their highest in over a month.

"The fact that Greece could try to rely on market financing could postpone a lasting solution (to its debt pile) that still needs to be found," said Daniel Lenz, a fixed-income strategist at DZ Bank in London, adding that the larger the share of market funding, the higher the risk for private investors.

Merkel's talks with Samaras coincided with the second day of a visit by French Prime Minister Manuel Valls, who wants more time to bring France's public deficit to within EU treaty limits.

Paris acknowledged this month that its deficit would not be below the EU limit of 3 percent of national output until 2017. It had pledged to do so by 2013, before winning a reprieve until 2015.

France is being urged by the EU and European Central Bank to step up reforms and budget consolidation at the same time as Germany is being asked to boost public investment as part of a strategy to revive a stagnant euro zone economy.

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