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With help from its EU partners and fresh determination, the debt-ridden euro zone member will regain its fiscal sovereignty as soon as possible and aims to return to markets in the middle of 2014, as expected, the minister said.

"We will make it, because this is vital not only for Greece but for the stability of the whole euro zone and the global economy, because in Greece the stamina of the financial system is being tested," he told Reuters in the second part of an interview.

Appointed in a June 17 reshuffle and speaking after euro zone finance ministers approved on Saturday a critical, fifth tranche of a bailout loan to avert default, Venizelos said he was grateful to EU partners and vowed to fulfill his obligations.

He said he would redouble efforts to raise 1.7 billion euros ($2.5 billion) in privatizations by September, as agreed with the EU and the IMF who pulled Greece back from the brink of bankruptcy with a 110 billion-euro bailout a year ago.

Greece must deliver 50 billion euros in proceeds from a massive and complicated state selloff by 2015, including 5 billion this year. So far, in 18 months in office, the socialists have yet to launch any privatizations.

Amid the worst recession in nearly 40 years, good news for the economy comes from the tourism sector, which makes up about 15 percent of GDP. Revenues are seen rising by about 10 percent this year after a 25 percent slump in 2009-2010, Venizelos said.

"The data we have so far from the Tourism Ministry and the Bank of Greece are encouraging that it will be a good year. Revenues will rise by about 10 percent," he said.

A tough political veteran who has held several portfolios and prepared the 2004 Olympics, Venizelos took in his stride comments by Eurogroup chief Jean-Claude Juncker that Greece's sovereignty must be severely limited during the bailout program.

"Mr. Juncker is a great Philhellene (friend of Greece)," Venizelos said. "He doubtless wants to always help Greece and the euro zone overcome its problems and, primarily, to avoid systemic dangers.

"There is no doubt we have very tough fiscal limitations and we must restore our fiscal sovereignty as soon as possible through the successful implementation of our program," he added.

FOREIGN INSPECTORS

Venizelos denied suggestions foreign inspectors would be placed in ministries to check progress.

"There will be no inspectors," he said. "We can all resort to the knowhow and expertise of the EU and other member states. This does not mean inspectors will be posted or that responsibilities will be removed from the Greek parliament, the Greek government or the Greek public administration."

Venizelos said selloffs and the reform of the tax system were among his top priorities and that he would lay out a detailed plan to fight chronic tax evasion and improve tax collection, which has fallen behind target, next week.

Greece has 20 days from Saturday to set up a privatization body and Venizelos said he would unveil its board to fellow Eurogroup ministers on July 11.

"I will announce this after I complete discussions with the opposition on the 2-3 key people, because we need the widest possible consensus," he said.

The conservative opposition has opposed the bailout, drawing criticism from EU officials, but says it agrees with some parts of the privatization plan, raising hope some political consensus can be reached.

International lenders are working on a plan to provide Greece with an additional 110 billion euros to avoid default which could hit European banks and other lenders.

Asked about a warning by the S&P rating agency that banks' plans to roll over Greek debt could be seen as default, which drove down the euro on Monday, Venizelos said it was crucial that any model included the strictly voluntary participation of private lenders.

"As markets are strict and merciless, we want the format that results from the next program to have a shape that is accepted by markets and they react positively," he said.

(Editing by Peter Millership)

S&P said in a statement on Monday that Greece would likely be in default if it follows a debt rollover plan pushed by French banks, in a blow to plans to draft a new bailout plan in which EU policymakers want to involve private creditors.

"Moody's is not a party to ongoing discussions on the Greek debt roll-over," the firm said in a statement to Reuters, when asked to comment about the French proposal.

"Once the authorities finalize their decision, any rating implications will be assessed through our published methodologies and definitions," the statement said.

North European creditor nations, led by Germany, are insisting that banks and insurers must share the burden of any new financial support for Greece, which is estimated to need some 110 billion euros ($160 billion) in new funding until end-2014.

But European policymakers are also keen to avoid a default rating on Greece, fearing possible contagion effects to the rest of the euro zone.

French banks, major holders of Greek sovereign debt, proposed voluntarily renewing some of the bonds when they mature but on different terms, hoping the plan would not be considered a default.

According to the plan, bondholders would reinvest at least 70 percent of the proceeds from bonds maturing between now and the end of 2014 into new 30-year Greek debt.

In a report published last week, Moody's said it would view a distressed exchange -- which it qualified as an offer of a new debt instrument of diminished economic value meant to avoid bankruptcy -- as a default, but it did not specifically refer to the French plan.

In early June, before the French banks came up with their proposal, the head of Moody's sovereign ratings group said it was hard to see how a private sector rollover of Greek debt would be truly voluntary and it would therefore likely constitute a default.

Last month, Fitch said if it placed Greece's issuer rating on a "restricted default" because of a debt rollover plan the credit rating agency was likely to issue a new, higher rating within 14 days once the deal was done.

Officials at Fitch Ratings said on Monday they did not plan to make any further comment on the issue for the time being.

Greece is rated junk by the three major rating agencies.

(Reporting by Ingrid Melander; Editing by Diane Craft)

European politicians and bankers had expressed confidence last week that the French proposal would not trigger a default, but ratings agency Standard & Poor's said it would involve losses to debt holders, most likely earning Greece a "selective default" rating.

"It is our view that each of the two financing options described in the (French banks') proposal would likely amount to a default under our criteria," S&P said.

French banks, major holders of Greek sovereign debt, proposed voluntarily renewing some of the bonds when they fall due, but on different terms.

S&P cut Greece's sovereign rating to "CCC" last month, from "B," on a view that any restructuring of the country's massive debt load would count as an effective default.

The euro fell from around $1.4550 to a session low around $1.4510 after the latest S&P comment.

Derivatives industry body ISDA said before the French proposal was released in late June that a voluntary agreement to roll over Greek debt would "typically" not trigger payments on credit default swaps.

Greece was already facing an uphill struggle this week to start the process of selling off state-owned assets and reform its tax system to meet European Union and IMF conditions for bailing it out. The deep spending cuts required under the loan terms have sparked angry protests on the streets of Athens.

Eurogroup Chairman Jean-Claude Juncker said Greece will lose sovereignty and jobs to meet those criteria, a comment that has enraged unions. Any suggestion of foreign intervention in running the country is an incendiary political issue that will make implementing reforms even tougher.

Public-sector union ADEDY, which has launched crippling strikes and protests, reacted angrily to his comments.

ADEDY President Spyros Papaspyros said Juncker was out of line: "Mr Juncker interferes in the internal affairs of a country, provokes European rules and is an embarrassment for the country whose government tolerates him."

Juncker's comments could trigger more of the anti-austerity street protests that have roiled the country for months as Greece stays stuck in its worst recession since the 1970s with a youth unemployment rate of more than 40 percent.

"The sovereignty of Greece will be massively limited," Juncker told Germany's Focus magazine in an interview released on Sunday. Teams of experts from around the euro zone would be heading to Athens, he said.

"One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.

EASIER SAID THAN DONE

Greece last week passed austerity measures worth 28 billion euros ($40 billion) and promised to deliver 50 billion euros in sell-off revenues by 2015, including raising 5 billion euros by the end of this year alone. On the list are public utilities whose sale is sure to prompt public reaction.

"Greece now needs to push faster fiscal adjustments and structural reforms," said EFG Eurobank economist Platon Monokroussos. "On the privatization front, it is of essence the government delivers fast results to send a strong signal to financial markets."

That is easier said than done.

The socialist government, which came to power on a social welfare platform, has yet to launch a single state sale in 18 months in power and must set up a privatization agency within weeks to meet its target.

It must also start to sell state property, estimated at up to 300 billion euros but often entangled in legal complications.

"The 50 billion euro target is not achievable," said Constantinos Mihalos, head of the Athens Chamber of Commerce. "Share values are very low right now because of the recession."

At the same time, Greece needs to deliver on pledges to reform a chronically inefficient tax system that has relied too much on middle class salary earners and let wealthy tax evaders off the hook, producing disappointing revenues this year.

Finance Minister Evangelos Venizelos told Reuters in an interview on Friday that Greece would tap for the first time private-sector expertise but tax offices around the country are notoriously resistant to any change.

"A greater effort is needed to rein in tax evasion and broaden the tax base in a bid to bring the ratio of revenues to GDP closer to euro area average and reduce expenditure and waste in the broader public sector," Monokroussos said.

Investors have feared that default by Greece would send shockwaves through the world finance system with some commentators saying such an eventuality could call the whole euro zone into question.

Another hurdle is the law on a uniform pay scale for the public sector, sure to cut further the salaries of civil servants who have already seen their pay reduced by an average 15 percent as a result of a wave of austerity measures to secure the 110-billion-euro bailout last year.

On Saturday, euro zone finance ministers approved a 12 billion euro loan Greece needs to avert default.

The IMF will meet on July 8 to approve the 12-billion euro loan tranche, which is expected to be handed over by July 15 and allow Greece to avoid the immediate threat of debt default.

But the country still needs the second rescue package, which is also expected to total around 110 billion. EU officials will now look at how private creditors can be involved voluntarily so that rating agencies do not declare the rescue a "credit event."

(Additional reporting by Wayne Cole in Sydney)

(Writing by Dina Kyriakidou and Emily Kaiser; Editing by Louise Ireland, Peter Millership and Neil Fullick)

Euro zone finance ministers on Saturday approved a 12 billion euro instalment of Greece's bailout and said details of a second aid package for Athens would be finalised by mid-September.

While the release of the emergency funds may calm nervous investors for now, Greece faces an uphill task in trying to implement the reforms demanded by international lenders which means the euro's path higher will be rocky.

The euro last traded at $1.4552, extending last week's 2.5 percent rally -- its heftiest since January.

The breach of last week's high around $1.4551 triggered more stop-loss buying, traders said, though it remained hemmed inside a broad range established since early May.

Appetite for risky assets like equities and high-yielding currencies such as the Australian dollar also received a boost from U.S. data that indicated the world's biggest economy may be recovering strongly from a recent spell of weakness.

The pace of growth in U.S. manufacturing picked up for the first time in four months, with an index of national factory activity rising to 55.3 in June from 53.5 in May, Institute for Supply Management (ISM) data showed on Friday.

Stocks in Asia's developed markets rose with Japan's Nikkei .N225 rising near the 10,000 level for the first time in two months while Australian stocks .AXJO gained 1 percent.

The MSCI index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.7 percent, touching its highest level since early June, adding to two consecutive weeks of gains.

U.S. shares rose 5.6 percent last week, its best weekly performance in two years. U.S. markets are shut on Monday for a holiday.

In Thailand, the baht and local shares .SETI are set to gain after the clear majority obtained by the Puea Thai party suggested the possibility of post-election instability looked less likely in the short term.

The Australian dollar added to its chunky 2.8 percent gains last week though some resistance around current levels of 1.0785 per dollar is seen. Retail sales data would offer investors clues on whether a August rate hike is likely.

Improved appetite for risk and the end of the Federal Reserve's quantitative easing policy reduced demand for U.S. Treasury bonds, with yields on 10-year notes settling at 3.18 percent, near its highest in almost two months and adding to a weekly rise of more than 30 basis points.

U.S. crude futures were trading above the $95 per barrel mark, holding on to last week's gains, despite a surprise move by the 28-nation International Energy Agency to release 60 million barrels of oil reserves.

Short-selling investor-bloggers have made enough noise, and cash, by shorting the shares of New York and Toronto-listed Chinese companies and issuing reports accusing them of fraud that the charges for borrowing shares in these companies has soared. And that can make the strategy's costs prohibitive.

They have also picked off the low-hanging fruit - the companies, most of which came to the U.S. market through reverse takeovers (RTOs), that have committed the most obvious accounting shenanigans.

There is therefore an increasing danger the short sellers will overstep by accusing healthy Chinese entities in the U.S. of misbehaving and face legal action from the companies or the authorities as a result.

"This is no longer an easy game. We're moving on from the Chinese RTOs. They've been beaten to smithereens by this point. The game is getting harder and no longer in the U.S., but rather is moving to Hong Kong," said John Hempton, a short seller of Chinese companies as the chief investment officer of Sydney, Australia-based Bronte Capital Management.

Through an RTO, a company merges with a shell company that already has a listing on a U.S. exchange as a way of gaining access to stock market investors more quickly and cheaply than through the more arduous process of an initial public offering.

Additional investor interest in the problems in the sector has not only increased the borrowing demand for shares to short and reduced their availability, but the spectacular plunge of some company share prices has brought down values, making it harder to find profitable trades, fund managers say.

There have been over 20 U.S. listed Chinese companies delisted or halted so far this year amid the allegations, while others have been hit by the resignation of their auditors.

Among the most notable to have suffered from such negative hits are Rino International (RINO.PK), China Media Express (CCME.PK), and Longtop Financial Technologies Ltd (LFT.N).

However, there have been occasions where shares have quickly bounced back after initially sinking on reports thy have been targeted by the short sellers.

COSTS RISING

An investor who hones in on a company believed to have provided fraudulent information and wanted to short the shares used to be able to borrow those shares at less than 1 percent a year.

"Costs are now up to anywhere between 7 to 70 percent," said Andrew Left, a Beverly Hills-based blogger and short seller who runs Citron Research. In some cases it is higher, perhaps even 100 percent.

Short sellers bet on a decline in a stock by borrowing shares in the market and selling them in the hope they can buy them back once prices have dropped. They would then return the shares to the owner and keep the difference as profit.

Carson Block, the director of research at one of the most prominent short selling firms, Muddy Waters, told Reuters in an email that the increasing inability to borrowing shares has made it more difficult to commit capital and resources to research into companies it suspects of fraud.

"It is far more difficult to short these days. It takes 100 percent of your margin buying power to borrow here and quite frankly some of the other exchanges haven't caught up with what we've dealt with the past 8 months," said Dan David, head of sales and daily operations at research and investing firm Geo Investing in Skippack, Pennsylvania.

"We are trading other exchanges, that's very much a recent development," he said.

SHORT INTEREST GROWS

The Hong Kong authorities have indicated that they think many of the recent problems have been because of loose listing standards in the U.S. In Hong Kong, for example, companies seeking listings have to have a track record of profitability that they aren't required to have in the U.S.

Indeed a source close to Hong Kong regulators dismissed the notion of widespread problems in that market, saying that the U.S. Securities and Exchange Commission "has acknowledged there's a problem with the way some of these companies have been able to list in the U.S., which wouldn't happen in Hong Kong."

Hempton doesn't buy this argument, though.

"It's the simple facts on the ground that make Hong Kong attractive - lots of large market caps and lots of frauds. The first Chinese forestry company that got pinged faking their ownership was in Hong Kong, not Canada," said Hempton.

Hempton was referring to China Forestry Holdings (0930.HK), whose shares were suspended in January of this year after auditor KPMG informed the board of directors of possible irregularities in its accounting books and its former CEO faced investigation by authorities.

More recently shares in another forestry concern, Toronto-listed Sino-Forest (TRE.TO), plunged leading to more than $4 billion of market value being lost on accusations of fraud that are denied by the company.

Singapore is also increasingly a fertile ground for those wanting to dig up accounting problems at Chinese companies.

On Thursday, the Singapore Exchange reprimanded Chinese multimedia firm KXD Digital Entertainment (KXDD.SI) and its former chairman and CEO Liu Fusheng for breaching a string of rules, including failing to disclose it had ceased business operations. [nL3E7HU0FF]

The same day, China Gaoxian (CGXF.SI) said its special auditor had obtained evidence showing its cash and bank balance at the end of last year was around 93 million yuan ($14 million), not 1.1 billion yuan which the fabric maker had originally claimed. [nSNZ1x9f9w]

Certainly, the figures are starting to support the talk of the beginnings of a shift in interest by short sellers.

Short interest, that is shares in a company being sold short as a percentage of the total number of shares outstanding, is rising on the Hong Kong Stock Exchange while it has slipped from a recent peak for U.S. listed Chinese companies, according to New York-based research firm Data Explorers.

Year-to-date, average short-interest among Chinese companies listed in the U.S. has doubled to 5.8 percent in the past six months, though it is off a recent peak of 6.7 percent.

Short interest in Hong Kong listed shares is considerably lower, but has risen to 1.34 percent from 0.81 percent around the end of last year, the firm said.

"The trend is identical, just not as aggressive, and that's probably related to fewer hedge funds based in Hong Kong," said Will Duff Gordon, research director at Data Explorers.

Gordon speculated it was unlikely many retail investors would switch their focus to Hong Kong from U.S. markets.

"There has been an uptick in Hong Kong short interest generally, but that could be related to wider macro issues," he said.

There has been increasing concern in the past year that China's economic boom could turn to a bust, particularly because of the possibility of a real estate bubble. Beijing has made efforts to slow down the pace of economic growth in an effort to short-circuit speculative investing and inflation.

"Rising short interest in Hong Kong could be a macro issue, but I think some of these investors and research firms in the U.S. have now developed an expertise and given the scrutiny here, it would make sense for them to apply their skills to places like Hong Kong," said Sahm Adrangi, principal owner at New York-based Kerrisdale Capital Management.

Iranian-born Adrangi's firm has a staff of five managing about $20 million in assets. He confirmed published reports that first quarter performance rose 73.2 percent, due mostly to shorting U.S.-listed Chinese companies accused of fraud.

However, rules in Hong Kong could throw up barriers to firms such as short selling research firm Muddy Waters if they don't have a license to offer advice on listed companies.

Block, in his e-mail, said this issue comes down to what extent there are protections for free speech to discuss a stock.

And not every investor is ready to bet against Hong Kong-listed companies.

"There is a witch hunt going on. They're going to find some companies (in Hong Kong) and I think it will be good in the long term for investors," said Himanshu Shah, president and chief investment officer of Shah Capital, a $300 million hedge fund in Raleigh, North Carolina.

Shah, who said his firm is mostly long China, said the country is moving in the right direction.

"It's not going to be accomplished overnight or in a quarter; the cleansing of corporate China has begun for sure." (Additional reporting by Ryan Vlastelica, David Gaffen in New York and Rachel Armstrong in Singapore. Editing by Martin Howell)