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After three weeks of political wrangling, a deal to bailout Greece may actually be announced later this week, according to several reports this morning.

European Union nations are willing to come to the aid of Greece, but are asking that the debt-riddled nation do more to reduce spending, the Wall Street Journal
reports this morning. Faced with a budget deficit equal to 12.7 percent
of its gross domestic product, Greece has "pledged to cut the deficit
to 8.7% of GDP this year and bring it below the EU's 3% ceiling by
2012," reports the WSJ. The EU plans to announce New austerity
requirements for Greece this week.

The plan to rescue Greece will likely involve a series of guarantees for Greek debt, but the details are far from settled. Here's the New York Times:

"...other members of the European Union -- much as they would prefer not to -- are discussing ways to show that they will stand behind Greece. In recent days, the outlines of a rescue plan have
started to come together, probably involving loan guarantees from the
German and French governments to encourage their banks to buy Greek
debt...

Other alternatives, including involving more countries in the euro zone, are also being discussed. France's state-owned bank, Caisse des Dépôts et Consignations, may be involved, a Greek newspaper reported
Saturday, while France's finance minister, Christine Lagarde, told
Europe 1 radio on Sunday that there were "a certain number of proposals
in the euro zone, involving either private partners or public partners
or both."

The AP has more on the rumored bond deal:

"The meeting between EU and Greek officials will take place
amid reports that the German and French governments are preparing to
support a bailout package involving state-owned banks buying Greek
government bonds. Greece has to roll over a large of its debts in the
next couple of months and is expected to start shortly with a 10-year
bond issue, worth as much as euro5 billion ($6.8 billion).

"Any aid will likely come with demands for more action to reduce Greece's yawning budget deficit which will fuel further weakness in economic activity," said Mitul Kotecha, an analyst at Credit Agricole.

Kotecha thinks the market reception to the expected bond issue will be broadly positive given the EU assurances already in place. That certainly appears to be the view in the bond markets, where the spread
between Greek and German 10-year yields continues to narrow.

The EU has given the Greek government until March 16 to show progress with its pledge to cut the deficit by four percent of GDP this year, gradually bringing it to under 3 percent in 2012.

Positive sentiment in markets was boosted by a raft of positive manufacturing surveys around the world. Following recent signs that the global economic recovery was stalling, the surveys the eurozone and
Britain helped soothe investors' concerns for the time being."