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France wants Greek deal now, warns of euro zone break-up risk

By Mark John and Ingrid Melander PARIS (Reuters) - France wants the euro zone to push for a deal with Greece before Sunday's referendum, President Francois Hollande said on Wednesday, in comments that differed sharply from those of German leaders. While the divergence in their public statements reflected different domestic political contexts, they came amid rising tension after Athens announced a referendum for Sunday on bailout terms offered last week by European creditors, and defaulted on its debt to the IMF. "(A deal) must be found before the referendum, it wouldn't have much sense afterwards," Hollande said. "If it doesn't happen, if we have to wait for a referendum, there is always a risk ... of entering a period of turmoil and the unknown. It's better to be sure than to leap into the void." "It is our duty to keep Greece in the euro zone. That depends on Greece ... But it also depends on us. As a European, I don't want the euro zone to come apart, I am not into intransigent comments, into brutal rifts," Hollande said. He made his comments hours before euro zone finance ministers were to hold their second conference call on Greece in two days, but also before Prime Minister Alexis Tsipras made a defiant television address urging Greeks to vote "No" on Sunday and insisting this would not mean quitting the euro. In contrast to Hollande, Merkel said on Wednesday that, although the door for talks with Greece remained open, this could not happen before the referendum. Her finance minister, Wolfgang Schaeuble, added that an overnight proposal from Tsipras offered no new basis for talks. "AUSTERITY VS GROWTH" Despite falling on opposite sides of the "austerity vs growth" debate that has divided Europe since the financial crisis, Paris and Berlin have together insisted over the past few months that Athens must engage in reform to unblock aid. But while Berlin has increasingly toughened its public stance, Paris has stepped up warnings on the risks that failure to strike a deal would entail for the euro zone as a whole. Hollande is under pressure from the left wing of his Socialist Party to show he is doing all he can to help Tsipras. A grouping of rebel Socialists called "Maintenant La Gauche" ("Now The Left") issued a statement on Tuesday implicitly urging the Greek people to vote "No". Since Tsipras's leftist government came to power in January, France has cast itself in a mediating role - but has had little to show for its efforts so far. Meanwhile it is in Merkel's interest to play tough in front of her ruling conservatives and German voters frustrated with what they see as Greek prevaricating. German government sources have in recent days characterised the French stance as "going through the motions". Even if there were a deal that Merkel could back, she would now need to convince a sceptical national parliament to back new negotiations on a brand new bailout package to Greece involving debt issued by the European Stability Mechanism (ESM), the zone's crisis resolution agency. Whether or not France genuinely believes a deal can be pulled out of the bag before Sunday, Hollande was set to depart on Wednesday on a three-day trip to Africa. Finance Minister Sapin, who was due to accompany him, opted to stay home instead. Asked by RTL radio if Germany's tough stance was making it harder to find a deal, Sapin refused to blame Berlin, saying the hardest line was coming from small EU countries that had already gone through painful reforms and had a lower standard of living than Greece. (Additional reporting by Michel Rose in Paris, Catherine Lagrange in Lyon and Andreas Rinke in Berlin; Editing by Kevin Liffey)