Reykjavik - Iceland's former ruling party Friday signalled it would accept holding a national referendum on membership in the European Union but remains opposed to joining the bloc.

A broad majority of the Independence Party delegates backed that stance at a party conference. They further said there should be a second referendum on a possible membership agreement with the EU.

Citing the need to protect Icelandic interests, including its fishing waters, the party said it believes that "EU membership will not be in the interest of Iceland."

Reykjavik - Iceland's central bank on Thursday lowered its key interest rate by 1 percentage point to 17 per cent, the first cut since mid-October when the country was hit by the global credit crunch.

The move was announced a week after the head of a delegation from the International Monetary Fund (IMF) concluded a visit to Iceland, saying there were signs Iceland's battered economy was showing some signs of improvement with inflation appearing to have peaked.

Reykjavik  - Iceland's battered economy is showing some signs of improvement with inflation appearing to have peaked, the head of a delegation from the International Monetary Fund (IMF) said Friday.

"The crisis has led to a sharp drop in economic activity, but a late-year turnaround remains within reach," delegation head Mark Flanagan said, adding that "the krona has stabilized and inflation appears to have peaked."

Reykjavik  - Icelandic investment group Baugur Thursday said it plans to file for bankruptcy after was denied an extension of its moratorium and temporary suspension of payments on Wednesday.

The announcement came a month after the district court in Reykjavik granted the moratorium as the group sought to restructure its operations.

Baugur Group chairman Kristin Johannesdottir issued a statement saying the decision was "a disappointment," adding that the group was convinced the restructuring plan was "viable."

Reykjavik  - Icelandic banking group Straumur-Burdaras on Monday became the fourth major bank to be taken over by the Icelandic government since October 2008 due to a lack of liquidity.

The Icelandic Financial Supervisory Authority (FSA) announced the decision the day after Straumur said it had obligations of 33 million euros (41 million dollars), but only had disposable funds of 15.3 million euros.

In interim committee was to lead the bank and chief executive William Fall has tendered his resignation, the agency said.

Reykjavik - The two remaining governors of the central bank of Iceland were due to resign after weeks of criticism of their handling of the economic crisis, reports said Thursday.

Central bank governor David Oddsson and governor Eirikur Gudnason, were reported to have said goodbye to bank employees, public broadcaster RUV said.

The report came as parliament was due to adopt a bill changing the composition of the central bank, including replacing the three governors with a single governor.