Iceland braces for next wave of storm and mulls IMF

By Omar Valdimarsson and Brett Young

REYKJAVIK (Reuters) - Iceland signalled on Sunday it was more ready to turn to the International Monetary Fund for assistance to pull through a financial storm that has brought its economy to the brink of collapse.

As Icelandic officials prepared to depart for Moscow this week to begin negotiations for an emergency loan from Russia of potentially billions of euros, a top minister gave Iceland's strongest signal yet it may ask for IMF help.

An official at the country's financial watchdog said a decision would be taken on Monday on whether to reopen the stock market, which was shut at the height of last week's turmoil.

Meanwhile, the fallout from the crisis showed no sign of abating. Retailing group Baugur, a once-powerful predator that acquired a string of famous brands, indicated it was willing to sell off its debts to a rival, even at firesale prices.

In fellow Nordic country Norway, the financial system is also being stretched. The government and central bank introduced new measures on Sunday to help banks get cash and planned to sell more than $55 billion (32 billion pounds) in government debt.

For Iceland, helping the banks with liquidity is no longer a potential remedy. Most banks are now under state control and the big question is whether to ask the IMF for foreign currency to ensure imports flow freely and to help banks trade again.

"My conclusion is that if we appeal to the IMF, other central banks and other nations would follow that track," Industry Minister Ossur Skarphedinsson told the Morgunbladid newspaper in a report published on its website on Sunday.

Skarphedinsson said that would give Iceland a chance to rebuild its foreign exchange market swiftly and would "strengthen our own currency and ensure a considerable cut in interest rates."