Cyprus closes in on bailout deal

City A.M. Reporter

CYPRUS closed in on a deal this afternoon to raise billions of euros and unlock a bailout from the European Union that could avert financial meltdown and exit from the euro, its ruling party said.

It comes after Moscow rebuffed requests from Cyprus for assistance to save Cypriot banks in which Russians have billions of euros at risk.

It is understood Cyprus was close to a compromise that would let parliament reverse its rejection of a rescue package offered by Eurozone partners a week ago for a controversial bank levy.

Germany warned Cyprus it was "playing with fire" but also kept up pressure by saying the Eurozone was well able to contain any crisis – sticking to a threat to cut Cyprus off.

With a looming Monday deadline set by the European Central Bank when it will sever essential cash flows to Cypriot banks if no bailout program is agreed, Cyprus took a first step toward financial consolidation by arranging for the takeover of big Greek units of its banks by a Greek competitor.