KIEV, Aug. 14 - Ukraine and its creditors on Friday failed to reach any progress in direct debt restructuring negotiations that would prevent the country from going into default.

The war-torn country and its biggest commercial lenders ended their second day of meetings at the Franklin Templeton investment giant's headquarters near San Francisco by issuing a two-sentence statement that served up more questions than answers, AFP reported.

"The Ukrainian delegation and the ad hoc creditors' committee held detailed discussions in San Francisco. Talks are on going," the statement said.

One source close to the issue told AFP that no personal meetings between Ukrainian Finance Minister Natalie Jaresko and Templeton's bond managers had been planned for Friday.

"Discussions will continue over the phone," the person said.

A second individual with knowledge of the negotiations said only that "talks will continue" at some level Friday.

Templeton and three other financial titans hold nearly two-thirds of the $15.3 billion in savings that cash-strapped Ukraine is seeking on its total foreign debt over the coming four years.

The restructuring is a mandatory part of a broader $40 billion global rescue package that the International Mandatory Fund patched together at the start of the year.

But the creditors refuse to accept a major reduction of their bonds' face value and want a proposed maturity extension to expire as soon as Ukraine's imploding economy returns to growth.

Sources said the bondholders have put strict conditions on a possible debt write-down of between five and 10 percent -- well off the 40 percent figure originally sought by Kiev.

Jaresko has since submitted a number of counter-proposals whose details remain private but reportedly include a smaller "hair cut" and larger interest payments.

Jaresko has called the California round of discussions "final" and threatened to impose a payment freeze on Eurobond interest and principal payments that come due in the coming weeks.

The state statistics committee said on Friday that Ukraine's growth slump had slowed to 14.7 percent of gross domestic product in the three months ending in June -- a marginal improvement on the 17.2 percent contraction experienced between January and March.

The economy ministry said its most optimistic scenario has Ukraine swinging back into positive GDP territory by the start of next year. (afp/ez)