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©AFP/File / Aris Messinis

There have been widespread protests against the proposed Greek austerity measures

BRUSSELS (AFP) - Europe split over IMF intervention for debt-ridden Greece on Friday, upping pressure on national leaders to resolve crisis plans just days from a crunch EU summit.

Germany, changing tack, said it was open to the possibility of the International Monetary Fund helping Greece while the Netherlands, Finland and Italy -- to varying degrees -- also declared themselves alive to IMF involvement.

Investors reacted negatively, with Greek government bond yields -- the interest rate that Athens must pay in order to raise money on financial markets -- also rising sharply. The euro weakened against the dollar.

Non-euro peers Britain and Sweden firmly back an approach to the International Monetary Fund if Athens concludes that it cannot keep up with debt repayments.

The shift is not universal. There has been no change in the French position, which holds that the Greek troubles are an internal eurozone matter.

Ireland is also opposed to going cap in hand to Washington, according to a government source.

The EU's budgetary overlord, Olli Rehn, said leaders had to come to a "specific political conclusion" and clarify the way forward "next week," having compared notes with IMF chief Dominique Strauss-Kahn.

But in a pointed sign, a diplomatic source warned it was unlikely that EU president Herman Van Rompuy would find sufficient support to place the issue on the formal agenda for the March 25 and 26 EU summit.

Greek Prime Minister George Papandreou has urged the EU to help his country borrow more cheaply when they gather in Brussels next Thursday and Friday.

"The German government does not rule out aid from the IMF if Greece requests it," spokesman Ulrich Wilhelm said after reports that Berlin was concerned European aid for Greece could break German and EU law.

"Time is running out" for definitive action, said Ulrich Leuchtmann, an analyst at Germany's Commerzbank, as Greece needs to raise some 20 billion euros (27 billion dollars) from international debt markets over the next two months.

In afternoon London trade, the European single currency tumbled to 1.3531 dollars from 1.3603 late in New York on Thursday.

The yield on Greek 10-year bonds rose to 6.333 percent from 6.265 percent on Thursday, more than double the rate for German bonds.

The European Central Bank has already said that an approach by Greece to the IMF would be "inappropriate."

Outgoing Dutch finance minister Jan Kees de Jager said his administration backed the IMF route, but added that the IMF alone "will not be enough" and that there would have to be a "parallel" European solution.

Finland, meanwhile, believes that eurozone contributions should be "bilateral" and "voluntary."

©AFP/File / Georges Gobet

Greek Prime Minister George Papandreou speaks to the media

A British diplomat stressed on Friday that "in the first instance this is a eurozone issue," but said IMF assistance -- "technical or financial" -- can be beneficial.

The IMF has never rescued a eurozone member but has been active in other EU states in recent months, giving out loans to Hungary, Latvia and Romania.

An IMF rescue for Greece would be seen by some as a humiliation for the eurozone.

"It's not a question of prestige, it's a question of seeing what is the best way to respond to the situation," European Commission chief Jose Manuel Barroso said in an interview with France 24 television.

Under pressure from the EU, Athens has announced draconian action to fix its public finances -- triggering strikes and violent protests on the streets of Athens.

©AFP / Yuri Kadobnov

The Mideast Quartet expressed deep concern about the situation in the Gaza Strip

MOSCOW (AFP) - The Middle East Quartet on Friday urged Israel to stop building settlements and set a bold target for a final deal with the Palestinians by 2012 as it tried to kickstart the stalled peace process.

But Israel's foreign minister -- whose country angered the international community by announcing last week the construction of 1,600 new settler homes -- swiftly condemned the statement as harming the chances of a peace accord.

"The Quartet urges the government of Israel to freeze all settlement activity," UN Secretary General Ban Ki-moon said after the meeting of the Quartet of the United States, the United Nations, European Union and Russia.

He said at the meeting hosted by Russia that Israel should also halt natural settlement growth, dismantle outposts erected since March 2001 and refrain from demolitions and evictions in east Jerusalem.

The Israeli plan to build more homes in annexed east Jerusalem led the Palestinians to call for a halt to peace talks and precipitated the worst crisis in US-Israeli relations in years.

Key facts on the Israeli settlements

East Jerusalem is the mainly Arab half of the Holy City which was captured and then annexed by Israel after the 1967 Six Day War.

Condemning the new settlement plan, the Quartet noted that Israel's annexation of east Jerusalem was not recognised by the international community and the city's status had to be resolved through negotiations.

With the peace process stagnant, the Quartet also urged Israel and the Palestinians to resume talks on final status issues with the aim of finding a settlement "within 24 months", Ban said, reading from the Quartet's statement.

He said such a settlement would end "the occupation which began in 1967 and result in the emergence of an independent, democratic and viable Palestinian state living side by side in peace and security with Israel".

Israeli Foreign Minister Avigdor Lieberman gave the statement a frosty reception and appeared particularly irked by its explicit target of a peace deal in two years time.

"Peace cannot be imposed artificially and with an unrealistic calendar," Lieberman was quoted as saying in an address to the Jewish community in Brussels. "This type of statement only harms the possibilities of reaching an accord."

He said the timetable gives the Palestinians the wrong impression "that by failing to negotiate directly they will achieve their goals by using all sorts of pretexts."

Chief Palestinian negotiator Saeb Erakat welcomed the Quartet's call, but asked also for a mechanism to "make sure that Israel does effectively halt completely all settlement activity in the West Bank and east Jerusalem."

The timing of Israel's settlement announcement had infuriated Washington -- Israel's chief ally -- coming as US Vice President Joe Biden visited the region.

Majority of Israelis see Obama as fair: poll

©AFP / Marco Longari

Tensions over Jerusalem have sparked the worst riots in recent years

Israeli Prime Minister Benjamin Netanyahu called Clinton late Thursday following a tense call last week when she had asked him to order a halt to the settler plans.

Clinton said Friday that the strong US reaction to Israeli settlement plans is "paying off".

"What I heard from the prime minister in response for the request we made was useful and productive, and we're continuing our discussions with him and his government," Clinton told AFP and other reporters in Moscow.

"It's one of the reasons Senator (George) Mitchell will be going back to the region and meeting with him in just a few days," Clinton said.

US ties with Israel are 'strong and enduring': Clinton

On Friday, Palestinian demonstrators clashed with Israeli security forces in the West Bank and east Jerusalem during anti-settlement protests after the Muslim Friday prayers.

As well as Clinton and Ban, Russian Foreign Minister Sergei Lavrov and EU foreign policy chief Catherine Ashton attended Friday's meeting, along with former British prime minister Tony Blair, who is the Quartet's representative.

©AFP / Ahmad Gharabli

A Palestinian youth throws a stone at Israeli border guards

Ashton's visit to Moscow came a day after she made a rare trip by a top foreign official to the Gaza Strip that was overshadowed by fresh violence when rocket fired from the Gaza Strip killed a Thai agricultural worker in Israel.

EU-Israeli ministerial meeting next week scrapped

Ban said the quartet was "deeply concerned" about the situation in Gaza, "including the humanitarian and human rights situation of the civilian population."

Amid an intense flurry of diplomatic activity, Ban is to visit the Middle East, including Gaza, the West Bank and Israel, this weekend while US special Middle East envoy George Mitchell was expected in the region on Sunday.