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UPDATE 1-Euro zone technocrats recommend EU/IMF mission chiefs return to Greece for bailout talks

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ATHENS, March 31 Euro zone deputy finance ministers have recommended Greek bailout review talks continue in Athens, a government official said on Friday, as Athens and its creditors seek a deal on reforms to unlock aid.

The recommendation, after a teleconference late on Thursday, is a clear sign of progress in long-drawn out talks between Greece and its international lenders on the country's fiscal progress and on labour and energy reforms. The delays have rekindled fears of a new crisis in Europe.

The technical teams of the lenders, the European Union and the International Monetary Fund, are expected to make a final decision later on Friday on their return to Athens to wrap up talks on a technical agreement ahead of a meeting of euro zone finance ministers in Malta on April 7, the official said.

It was not yet clear how much progress had been achieved.

Sources told Reuters this week that Greece and its creditors had reached a broad outline of agreement on some key labour issues.

Athens had also agreed to cut pension spending and to lower the current tax-free threshold to about 6,000 euros, after its current, 86-billion euro bailout expires in 2018.

Slashing the market share of state-controlled Public Power Corp through the sale of coal-fired units was also under discussion.

These measures were aimed at convincing the IMF to participate financially in the bailout. EU countries, including Germany, want the Washington-based fund on board, to add credibility to a programme which has been a difficult test for European governments. (Reporting by Renee Maltezou; Editing by Alison Williams)

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