* Tiny signs of improvement for Greek repo * Benchmark dollar Libor at 3-1/2 mth high ahead of Fed * U.S. central bank comments keenly awaited LONDON, March 15 (Reuters) - The frozen Greek repo market isshowing the first tentative signs of improvement, a leadingbroker said on Monday, as euro zone finance ministers met withpotential aid for Greece topping their agenda. The Greek repo market -- where funds are lent againstsecurities such as government bonds which are then repurchasedat an agreed later date -- ground to a halt several weeks ago,as concerns over the indebted country saw its bond yields soarand counterparty credit lines to its banks disappear. But Greece's recently issued 10-year bond has yieldedprofits for investors, helping to calm nerves, and EU financeministers hope to agree on a way of providing Athens withfinancial aid, despite French and German doubts a deal will bereached [ID:nLDE62D0C2]. Broker ICAP said last week was "significant" in that it wasthe first week of the year in which the trend of closing creditlines had reversed, with a few lines to Greek banks reinstated. However, it added that there was no sign yet of anysignificant unfreezing of activity, with the non-domesticgeneral collateral market remaining "pretty much dead". Where Greek repo does trade, it is doing so on specialterms, meaning it is below general collateral rates, the brokersaid. "A major reason for this could well be the size ofoutstanding short positions in the Greek government cash marketwhich will likely have produced strong demand for the stock onrepo, hence driving rates downwards," said economist Don Smith,adding four bonds were trading negative on repo. That means the bondholders receive a premium for lendingthem rather than paying interest on funds received against them. "The performance of Greek debt, particularly at the shortend, has shown that there are less short-term fears over theability of Greece to finance its debt," said Credit Agricole CIBrate strategist Peter Chatwell. "Of course the Eurogroup and Ecofin meetings are part of thereason why Greek debt has been well bid, but I suspect thatthere is a strategic undertone to the recent buying." Three-month euro Libor EUR3MFSR= inched higher butabundant amounts of excess liquidity in the financial systemkept the rate pinned near record lows. [ID:nEAP000029] FED LANGUAGE KEY The main event of the week was set to be the U.S. FederalReserve's policy meeting on Tuesday. Apprehension ahead of the meeting has seen three-monthdollar Libor USD3MFSR= -- the global benchmark for banksborrowing dollars -- rise to a 3-1/2 month high. While no one expects the Federal Reserve to start hikingrates any time soon, it has been unwinding extraordinarymeasures put in place during the financial crisis. Market focus is on whether the Fed removes its commitment tokeeping interest rates low for an "extended period". "The Fed does not want to induce a very negative response inthe market. Even if the word 'extended' is dropped, theFed has no intention of signalling that rate hikes areimminent," Societe Generale said in a note.