Europe moved to re-open funding to Greece's stricken economy on Thursday after the parliament in Athens approved a new bailout program in a fractious vote that left the government without a majority. The European Central Bank increased emergency funding for Greek lenders, although capital controls will have to remain in place to avoid a run on the banks when they reopen on Monday. European Union finance ministers also approved 7 billion euros ($7.6 billion) in bridge loans to Greece, allowing it to make a bond payment to the ECB next Monday and clear its arrears with the International Monetary Fund. The loans will be finalised on Friday provided Germany's parliament approves a Berlin government request to open talks on a three-year bailout program - Greece's third in the past five years - worth up to 86 billion euros. A majority of Germany's conservative lawmakers voted in favor of starting talks on a third Greek bailout in a test ballot on Thursday, the eve of a vote in the Bundestag lower house of parliament, sources in the conservative parliamentary faction said. In the test ballot, 48 lawmakers in the conservative bloc opposed talks on further Greek aid while three abstained, the sources said. The conservative bloc, composed of Chancellor Angela Merkel's Christian Democrats (CDU) and their Bavarian allies, the Christian Social Union (CSU), has more than 300 seats in parliament but it was not clear how many conservative lawmakers were at the test vote. The Bundestag is expected to give Merkel's government a mandate to open negotiations, with the Social Democrats - her junior coalition partner - and some opposition parties expected to vote 'Yes'. REWARD FOR TSIPRAS The twin lifelines were a reward for Greek Prime Minister Alexis Tsipras after he won the backing of parliament in the early hours of Thursday for the tough reform measures demanded by creditors led by Germany. Tsipras was weakened by a revolt in his left-wing Syriza party, who voted against the measures, forcing him to rely on opposition votes to pass the package. He is expected to reshuffle his cabinet to replace four ministers and deputy ministers who rebelled. The 40 year-old prime minister told aides the rebels had created an "open trauma" in the party but that he was committed to sticking to the deal, a government official said. Interior Minister Nikos Voutsis said a snap election could be held in September or October, "depending on developments". German Finance Minister Wolfgang Schaeuble, one of Greece's toughest critics, questioned whether Athens would get a third bailout, even after the parliamentary vote. He suggested its financing needs were spiraling and a debt "haircut" or write-off - outside the euro zone - might be a better solution. "We will now see in the negotiations whether there is even a way to get a new program, taking into account financing needs, which have risen incredibly," Schaeuble told Deutschlandfunk radio. After meeting with SPD politicians in Berlin, Eurogroup President Jeroen Dijsselbloem said he would like discussions about a possible Greek exit from the euro zone to stop and he hoped German lawmakers would support opening talks on further Greek aid in the parliamentary vote on Friday. The move by the Greek parliament was enough to persuade the ECB to raise Emergency Liquidity Assistance (ELA) for the banks by 900 million euros for a week to nearly 90 billion euros. "Things have changed now," ECB President Mario Draghi told a news conference in Frankfurt. "We had a series of news with the approval of the bridge financing package, with the votes, various votes in various parliaments, which have now restored the conditions for a raise in ELA." Draghi said it was difficult to make decisions on Greece given the constraints of an ELA program which was never meant to provide unlimited and unconditional support for a banking system facing a major overhaul. Deputy Finance Minister Dimitris Mardas said the ECB support would allow banks to re-open, three weeks after they were closed when Athens imposed capital controls to prevent a flood of withdrawals collapsing the banking system. "All the banks everywhere will be open," he told state television. Cash withdrawals, currently limited to 60 euros a day, are likely to remain restricted. "TIMEOUT" BETTER? Finnish and Lithuanian lawmakers on Thursday gave their approval to begin negotiations. Schaeuble said he would vote to open talks but underlined risks surrounding negotiations that will be conducted over the next few weeks.

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