By Karolina Tagaris and Gavin Jones
ATHENS/ROME (Reuters) - Greek Prime Minister Alexis Tsipras forecast a happy end soon to fraught negotiations with creditors on a cash-for-reform deal, and the chairman of euro zone finance ministers said talks were making progress, though not enough for a deal next Monday.
However, with Greece fast running out money, sources close to the talks with the International Monetary Fund, the European Commission and the European Central Bank said there was still no breakthrough on crucial sticking points over pension and labour market reforms and budget targets.
Tsipras, who has taken personal charge of the negotiations, told parliament in Athens: "I am confident that we will soon have a happy ending and that despite the difficulties... we will carry out the agreement which will be concluded soon in Europe."
The leftist leader said his government was "doing whatever it should in order to reach ... an honest and mutually beneficial agreement with our partners", but gave no indication of yielding on the lenders' core demands for painful reforms.
The government has said its "red lines" are that it will not make further pension cuts or legislate to ease layoffs in the private sector. It has given some ground on privatisations and value added tax but wide gaps remain.
In Rome, Eurogroup chairman Jeroen Dijsselbloem said Monday's meeting of finance ministers of the currency area would not be decisive, but negotiations were moving forward. Greece's partners would only consider debt relief once Athens committed to and completed its current bailout programme, he said.
Italian Economy Minister Pier Carlo Padoan told a joint news conference after talks with Dijsselbloem he was confident of a deal in "a reasonable time frame".
Despite the slow pace of detailed negotiations, EU officials said they were keen to ensure the Eurogroup sends a positive message on Monday that a deal with Greece is in the works and to avoid another confrontation like the one with Greek Finance Minister Yanis Varoufakis in Riga last month.
However, they said the outcome would not be enough to prompt the ECB to allow Greek banks on emergency liquidity support to buy more short-term treasury bills to ease the government's funding crunch.
A senior EU source said Brussels believed Athens has enough money left to pay a crucial 750 million euro debt instalment to the IMF on Tuesday and meet other payment obligations in May.
It was essential to reach a deal by the end of May to allow time for some parliaments to approve the agreement and authorise disbursement of 7.2 billion euros left in Greece's existing bailout, which expires at the end of June.
GERMANY CRUCIAL
As so often since the euro zone's debt crisis began in 2010, much hinges on the position of Germany, the EU's main paymaster and Greece's biggest creditor nation.
Tsipras has spoken by telephone to Chancellor Angela Merkel several times this week, a German government spokeswoman said, most recently on Wednesday night. He gave no details.
A source briefed on German government thinking said Merkel was willing to take a deal to continue financial support for Greece to an increasingly sceptical parliament provided Tsipras made serious commitments on the key reforms.
The source said Finance Minister Wolfgang Schaeuble and a growing number of lawmakers in Merkel's conservative CDU party were sceptical about Greece's ability to stay in the euro zone.
Another potential hurdle may lie in Finland, where the head of a Eurosceptic party that came second in a general election and has agreed to enter a new governing coalition said it would make sense for Greece to leave the single currency.
Timo Soini, leader of the Finns Party and possible next finance minister, declined to comment in a television interview on what position the next government would take on a third Greek bailout, saying that in a coalition "no one dictates nothing".
Asked whether he would still like to see Greece thrown out of the euro zone, he said: "That would perhaps be the clearest option for everybody, also for the Greeks."
Deputy finance ministers in the Eurogroup Working Group, which prepares decisions for ministers, were to hold a special teleconference on Greece later on Friday to review the state of the negotiations, which may continue into the weekend.
(Additional reporting by Michelle Martin in Berlin, Paul Taylor and Jan Strupczewski in Brussels and Renee Maltezou and George Georgiopoulos in Athens; Writing by Paul Taylor; editing by Anna Willard)
