REYKJAVIK, Oct 7, 2008 (AFP) - Iceland's central bank said Tuesday Russia would grant it a loan of four billion euros (5.4 billion dollars) but later clarified that the negotiations would only start in a few days.

'The Russian ambassador to Iceland, Victor I. Tatarintsev, informed the chairman of the board of governors of the central bank of Iceland this morning that Russia would grant the central bank a loan in the amount of four billion euros,' the bank said in its initial statement Tuesday morning.

After Russian Deputy Finance Minister Dmitry Pankin was quoted by the RIA Novosti news agency as denying the information, the central bank issued a second statement stating that 'the (two) countries have decided to start in the next few days negotiations on financial issues.'

A central bank economist who asked not to be named told AFP that the second press release was simply 'to explain that we will go to Moscow to finalise. People will go to Moscow very soon.'

Icelandic Prime Minister Geir Haarde meanwhile told a press conference in Reykjavik that 'representatives from our side will go to Russia today or early tomorrow to discuss the exact conditions.

'But as with everything else in life, nothing is certain until it is certain,' he was quoted by the Swedish TT news agency as saying.

According to the central bank's first statement, the anticipated loan 'significantly bolsters the foreign exchange reserves of the central bank of Iceland and thus underpins the stability of the exchange rate of the krona.'

The announcement came as Iceland's Financial Supervisory Authority announced it would take control of the country's second largest bank, Landsbanki, after Prime Minister Haarde said Monday his government was ready to take over all the island's banks to ward off the prospect of national bankruptcy.

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