* Bailout could run to 10 billion euros, officials say
* Becomes fifth euro zone state to seek European aid
* EU/ECB aid mission to Nicosia kicks off next week -source
NICOSIA, June 26 (Reuters) - Cyprus, the fifth euro zone country to seek emergency funding from Europe, may need a bailout that is more than half as big as its 17.3 billion euro economy, officials said on Tuesday.
The Mediterranean island, with a banking sector heavily exposed to debt-crippled Greece, said on Monday it was formally applying for help from the European Union's rescue funds.
Cyprus is the euro zone's third smallest economy but it joins Greece, Ireland, Portugal and Spain in seeking EU rescue funds to try to stay afloat, in the latest sign that policymakers have failed to prevent the debt crisis from spreading.
European leaders will meet at a summit on Thursday and Friday but they are not expected to come up with a lasting solution to the region's problems that have also sent Italy's borrowing costs soaring.
Work on determining exactly how much aid Cyprus needs will start next week when officials from the European Commission and the European Central Bank - and probably the IMF too - travel to Nicosia, one source involved in the plan told Reuters.
Two euro zone officials said that a package of up to 10 billion euros was being considered.
"The exact number has not been decided yet. It was to be 6 billion for the state financing and 2 billion for the banks but that is optimistic - it is more likely to be seven and three - up to 10 billion euros in total," one euro zone official said.
A second official confirmed the amount was likely to be up to 10 billion euros.
While the sum is easily within the range of the European Financial Stability Facility (EFSF) bailout fund, it may lead to demands for collateral or for private bondholders to take a writedown as they did in Greece.
Greece's second, 130 billion euros bailout is equal to about 60 percent of the country's gross domestic product and private bondholders were asked to contribute to making debt servicing more manageable through a debt restructuring.
Cyprus' most urgent needs is to plug a 1.8 billion euro regulatory capital shortfall in its second largest lender by June 30.
Potential aid could be more comprehensive to cover fiscal requirements, Finance Minister Vassos Shiarly told Reuters.
"For Spain it's about sectoral help for the banks. Cyprus is, in terms of volume, rather an island that we must help because it has been so handicapped by the Greek deficit at the moment," Austrian Finance Minister Maria Fekter said.
Cyprus is thought to have applied to the EU for aid after attempts to secure loans from either China or Russia. Those efforts, however, will be ongoing.
"We will continue efforts to secure a bilateral loan, which can be used accordingly," government spokesman Stefanos Stefanou said.
Cyprus has been shut out of international capital markets for more than a year, with yields on its 10-year benchmark bond at over 16 percent on Tuesday. Sidestepping EU aid earlier, it secured a 2.5 billion euro loan from Russia in late 2011.
The loan amount is expected to cover its needs in 2012, but not in 2013, when Cyprus has 2.25 billion euros in refinancing, including a euro medium term note (EMTN) redemption.
President Demetris Christofias, whose administration has been slammed by opposition for dragging its feet in both applying to the EU and taking measures earlier to shore up the island's economy, was to brief politicians later on Tuesday.
Christofias has been accused by the opposition of ignoring warning signs that the economy was in trouble, suggestions the government strongly denies.
Cyprus assumes the rotating EU presidency on July 1.
"It is a tragic coincidence," parliamentary speaker Yiannakis Omirou told state radio.
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.