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Thanassis Stavrakis, Associated Press
Poul Thomsen, the International Monetary Fund mission chief in Greece, right, European Commission official Matthias Mors, center, and Klaus Masuch of the European Central Bank leave Maximou mansion after a meeting with Greek Prime Minster Lucas Papademos in Athens, Friday, Jan. 20, 2012. European Union and International Monetary Fund representatives start new round of talks with officials in the Greek capital on the course of Greece's austerity program and pledged reforms. The outcome of these talks will determine whether the EU and IMF release the next installment of Greece's vital rescue loans.

ATHENS, Greece — Greek officials Friday said they were confident a debt relief deal can be reached "very soon," amid hours-long negotiations in Athens with private creditors, but several eurozone members maintained pressure to lower interest rates on the proposed agreement.

Talks dragged on past midnight (2200 GMT; 5 p.m. EST), as Prime Minister Lucas Papademos met for a third day with negotiators from the Institute of International Finance, which represents the private creditors. They are being asked to take a loss on their bond holdings to lighten Greece's debt load by €100 billion ($129 billion).

The meetings will continue Saturday, Greek officials said.

"The atmosphere of the talks is good. They are continuing today and we hope they will be concluded very soon," government spokesman Pantelis Kapsis told private Radio 9. "This is very important for the sustainability of the national debt and our ability to handle the debt."

A European diplomat told The Associated Press in Brussels that a deal could be reached during the weekend after progress was made. But the diplomat added that several eurozone countries still maintain that the proposed interest rate being considered in a bond swap is too high. The diplomat requested anonymity because the talks are confidential.

Papademos was joined by Finance Minister Evangelos Venizelos at two separate meetings Friday — lasting two and four hours — with two top Institute of International Finance officials, Charles Dallara and Jean Lemierre.

The negotiations also were discussed via a teleconference with eurozone officials, Venizelos said.

An agreement is needed if Greece is to get the next batch of bailout cash to prevent a devastating debt default. Greece does not have enough money to cover a €14.5 billion bond repayment in March.

The bond-swap deal is part of a second bailout agreed by eurozone countries, worth €130 billion ($168 billion) in loans and support for banks.

Under the proposed deal, private creditors would cancel 50 percent of their Greek debt in exchange of a cash payment and new bonds with a longer maturity. But the negotiations stalled last week over a disagreement on the interest rate those new bonds would have.

The two sides are now considering a proposal to set an interest rate of below 4 percent that would gradually increase until 2020, according to European officials.

Louka Katseli, a minister in Greece's previous Socialist government, said the talks are being complicated by the involvement of a large number of parties with a stake in the debt deal.

"This does not only involve Greece and the creditors," Katseli told private Skai television.

Heavily involved behind the scenes are countries such as Germany, which is paying the bulk of Greece's rescue loans, and the IMF, which is also involved in the bailouts. In addition, there are the individual bond holders such as hedge funds which have bought Greek bonds but also hold default insurance, Katseli said.

Despite caution in European markets, shares on the Athens Stock Exchange rose 2.7 percent to 708.18 on Friday in anticipation of a deal.

"Certainly we will have an agreement, and the extent and all the details of this agreement will determine whether the markets will take this as a good signal or as a bad signal," Aggelos Tsakanikas, head of research at the Foundation for Economic and Industrial Research, told AP Television. "We have to reduce our debt. ... It's something that is very important for the Greek economy."

Also Friday, international debt inspectors arrived in Athens to assess whether Greece is doing enough to get more bailout cash.

Officials from the European Union, the European Central Bank and the International Monetary Fund met with Venizelos. They will scrutinize Greece's public finances to make sure it is on track with painful austerity reforms needed to keep tapping rescue loans.

Near-bankrupt Greece has been surviving on a €110 billion ($142.02 billion) rescue loan program from European countries and the IMF since May 2010, but requires additional help to meet its funding needs.


Gabriele Steinhauser reported from Brussels. Nektina Efthymiou, Derek Gatopoulos and Demetris Nellas contributed from Athens.