Cyprus President Nicos Anastasiades entered emergency talks with creditors seeking to avert bankruptcy.
FIERCE negotiations to resurrect a deal for the EU and the IMF to bail out Cyprus appear to have wrapped up early, President Nicos Anastasiades has indicated on Twitter.
"Efforts have culminated", read a translation from the Greek, with EU sources subsequently stating that a preliminary agreement is in place to hit Bank of Cyprus depositors with a massive 40 per cent "haircut" on deposits of more than 100,000 euros pending endorsement by Eurogroup finance ministers.
Waiting Eurogroup finance ministers were set to go over the new plan with a view to approval.
During more than 10 hours of talks with bosses from the ECB, IMF and the EU, Anastasiades had fought for the survival of the island's No. 1 lender, the Bank of Cyprus.
The deal hammered out would see the bank, which carries one third of all holdings, survive.
But this would come at a massive price for investors, which one senior EU source said could be as high as 40 per cent.
With Cyprus' banks on the verge of collapse, residents in the capital are pessimistic over the future of their economy. Jessica Gray reports.
Another senior EU source said there would be no levy -- a major U-turn from last week's collapsed deal to clobber all savers on the island.
But Cyprus's second bank, Laiki, would be wound up as part of the agreement, he added.
Smaller account-holders will be covered by the EU's deposit guarantee legislation, which runs to the 100,000-euro threshold, while those above that level face a hefty haircut.
The negotiations were aimed at pulling together some seven billion euros, mainly from the Cypriot banking sector, to unlock a 10-billion-euro ($A12.51 billion) loans package from eurozone partners and the International Monetary Fund.
A major sticking point throughout the talks was a European Central Bank demand for the Bank of Cyprus to pay a nine-billion-euro bill due to Frankfurt.
Cypriot president Nicos Anastasiades warned he may be forced to quit as he battles Brussels bailout bosses.
Earlier, hundreds of Cypriot demonstrators have rallied outside EU offices and the presidential palace in Nicosia, calling on the government to defy international pressure to take a "criminal" bailout.
As they awaited the result of last-ditch talks in Brussels, the protesters slammed President Nicos Anastasiades and the so-called troika of the European Union, the International Monetary Fund (IMF) and the European Central Bank (ECB).
About 500 members of the communist Akel Party gathered outside the offices of the European Commission chanting: "Don't bow, people of Cyprus, stand up for your rights," and "Troika prints euros and buys nations".
"This is the Third World War in an economic form and we will stand up to it with all of our strength," protester Marina Charalambous said.
Another protester, Anda Dimitriou, said: "Cypriots are proud people, very hardworking people. Europe's stance is unacceptable and criminal."
A banking bust in Cyprus sent savers on to the streets in protest last week and sparked fears of another European crisis.
Athina Kariati, said Cyprus had to fight efforts to make it accept conditions including a "haircut" for bank depositors.
"They are going to let people starve in order to save the large capital," she said. "Right now we have to save our economy completely, refuse to pay the debt and nationalise the banks," she said.
Party member Andreas, a pensioner who declined to give his surname, said the troika were "not considering the people of Cyprus, but only figures and money".
"Their main concern is about Cypriot banks and that goes against the basic principle of the EU, guarding people's wellbeing," he said.
Akel, which has 19 seats in the 56-member parliament, had refused to sign a bailout agreement on the terms on offer while it was in power before Anastasiades's election last month.
"Anastasiades is responsible for this," said Charles Vassiliou, another Akel member.
"He listens to the troika. Akel would have handled the situation very differently. We would never have put Cyprus hostage to the troika. We would have quit the eurozone and gone back to the (Cyprus) pound."
Some demonstrators were gloomily fatalistic about Cyprus eventually being forced to abandon the European single currency that it adopted in 2008.
"We are bankrupt," said Starvros Georgiou.
"Sooner or later we will return to the pound with tremendous consequences."
The other protest at the presidential palace involved around 200 people, mostly bank workers whose jobs and pensions are on the line.
They held a banner saying: "We will not become slaves of the 21st century."
A female protester who declined to give her name compared the crisis to 1974, the year that Turkish troops occupied the island's northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.
"Everything is pre-planned because the government wants to follow the troika. Everything is sold and betrayed as back in 1974," she said angrily.
"How can there be a light at the end of the tunnel when a government doesn't know how to negotiate, only because they want to follow troika. Anastasiades is committed to (German Chancellor Angela) Merkel."
Negotiations in Brussels among Eurogroup finance ministers on Cyprus were put back by at least two hours on Sunday as talks dragged on between Anastasiades and EU and IMF chiefs.
